I am back!

After a very hectic 1Q08 I am back with a vengeance. What happened since last? Not much. Markets are down, Airlines writing Chapter 11 and the Digital Marketing space is still a mess. The good news: Consumers have less money, will give us some breathing space. The better news: Consumers have less money, will stay at home more, hopefully means more digital consumption. The best news: I agree with Battelle of Federated Media, Google is becoming a destination site. What is it interesting? Search for 'Madonna Video' on Google. First 2 results for Organic Search is YouTube. At the same time, VH1 paid for the top spot on the Paid search results. Not fair.

HBO Vs. Netflix or Broadcast Vs. OnDemand

A couple of weeks ago I have discontinued my HBO premium package. I am a TimeWarner customer and decided to use the ~$12 a month for a Netflix subscription. While seeing HBO ads all over the subway on my way to work this morning, I was thinking of how dated and irritating the broadcast model is. For ~$12 I got a bunch of oldish movies (6 months+) and a few TV series using the same old model, i.e. 18 new chapters every season. And in between? Reruns of programs of which highlights I can find on YouTube if they were that good.

So why am I comparing to Netflix? For the ability to choose from a wider selection of movies and for the future. The future since I believe Netflix's mindset is positioning them closer to increasing the share of audience and revenues originating from Digital OnDemand consumption of Video Entertainment content. The Netflix Online OnDemand service is pretty poor at this point of time. Limited selection, annoying installation and compromised QoS. I am betting on them to improve it.

For the sake of the future of Online Digital Entertainment I am hoping Netflix will introduce advertising into their OnDemand service. It is the only sound way to battle infringement of copyrights online and drive the cable and satellite companies from the dated premium subscription models.

The PC is getting a tad closer to the TV

Hectic December month have prevented me from updating the blog for a while. A couple of months ago a word of mouth have made me aware of a new device from SanDisk. TakeTv is a conduit that allows for easy transfer and control of content from the PC to the TV. I have claimed for a while that the Internet, in its current consumption mode, is a limited vehicle for monetising video content. I am still disappointed that very little headway is made to bring the PC closer to the TV.

I have yet to try TakeTv but feel that the effort is commendable regardless of the results. You can learn more here http://www.take.tv/.

Media spend measurements

Eric Picard of Microsoft have challenged in his last column the methodology used by many to measure the spread of media dollars across channels.  All points made are valid and not that surprising considering the rapid changes in consumption patterns and the fact that investments in tools for measurement is lacking and lagging.

I do feel however that the solution is not as simplistic as attempted to be offered by Eric. For how long will we be able to consider NBC or ABC a broadcast company? Should we assume they will rely on Pure-play companies for distribution online? How will these companies utilize social networks that are becoming the predominant entry point to the Internet? What will their distribution channels be for mobile devices?

As Eric correctly mentions, the more relevant point of discussion relates to the different forms of Display Advertising. TV, Online, In-Game and Mobile channels have many similarities:

• The Currency 
• The Message content, i.e. Creative
• Marketing objectives and the position of the desired response in the buying funnel

Another point of growing similarity is the user mode of consumption. More and more digital content is consumed as a lean back experience that is similar to TV. In such a mode the value of active digital engagement is lower and therefore the marketing content can be similar. It is in these cases that it is difficult to distinguish where the media funds were invested. It is also this kind of inventory that can easily be bought by a traditional buyer using traditional dollars.

The resolution? While I am not sure this will be a growing problem I feel it is within the hands of advertisers themselves to resolve it. I am confident that bundling of media will only continue (Easier for the seller and beneficial to the traditional media buyer to demonstrate its value against the digital one) and Advertiser can insist on measuring and reporting on their Broadcast Vs. Digital spend separately. This will incentivize all of us to distinguish between the spend on NY Times Digital Vs. Print and will hopefully encourage investment in automated digital measurement tools.

 

Blackberry 9000 - The answer to iPhone?

I honestly can't understand the iPhone mania. Maybe my fingers are just exceptionally fat and the rest of the world happens to love the annoyingly narrow touch keyboard. I respect the attempts to create a device that will successfully converge the 3 main applications consumers are after: Voice, Email and Music. 

I remember giving the Sony-Ericsson Walkman phone a shot a couple of years ago. This was an attempt at converging Voice and Music. I was not happy. The software was clunky and the phone reacted slowly. I am convinced the iPhone is doing a better job on this front. 

However, the iPhone doesn't cut it as an email device. It is also too big in my opinion and very male oriented (I don't mean to sound sexist but how feminine is a phone of this size?). Apple might be happy with a phone that converges Music and Voice only and I am sure their stock will be as well.

In order for Apple to create a device that will successfully converge all 3 applications, it needs to do, in my humble opinion, the following:

• Integrate with Microsoft based email application - This will not come naturally to Mr. Jobs
• Enable a proper keyboard
• Reduce the physical size of the phone

I think only 3 companies have a shot at this task over the next few years: Apple, Research In Motion & Microsoft. RIM is rumored to work on a next series of phones that will improve the user experience. No word on Digital Media capabilities though. 

I am still ambivilent about mobile devices as a vehicle for digital content distribution and consumption. I do believe however that volume of Business & Social related activities on these devices will increase and will command adoption of Providers and Phones.

PubliciS(anity)

Unless I missed some big headlines, it took a year too long for it to come. One of Advertising industry's leaders has finally proclaimed: "The second bubble is here". Maurice Levy came forward and announced to the FT what I am suspecting for quite a while. You can read it here.

In my opinion it is not only the imbalance between the varieties of media offerings out there (The tail is getting longer indeed). The nature of digital media consumption is short bursts of content. This means increased ad inventory but how should it match advertising spend? Can and should a single consumer be exposed to more advertising messages online than he was on TV for similar duration of consumption? I don't think so. The reality will be that, at least when it comes to display banners, only the well targeted ones will prevail. 

In any case, Thank You Maurice and exercise restraint please Venture Capitalists. 

MSFT & Facebook

Post Microsoft’s cash infusion to Facebook, placing the valuation of the social network at a staggering $15m+ I am trying very hard, as many others in the Digital Media industry, to rationalize the numbers. Here are my risks and concerns for the group up in Redmond (A group to whom I have utmost respect for):
Social Media as an Online Advertising Vehicle: Online Ad spending growth – Understood. Increase in consumption of Social Media – OK. Exclusive reach of an audience segment – Can live with that. However, where lays the balance between the value of a single user’s exposure to advertising and the return on such investment? Social media sites have yet to prove themselves (I doubt they ever will) as catalysts in online purchase decisions. To me they seem to do a fair job as a viral tool, I am not sure If they can be used as a tool for introduction of brands.
In general, I would hope to see advertising based valuations that have stronger correlation to the track record of the media acquired in fulfilling marketing objectives. While I respect that acquisitions are made based on future projections, I do feel that a mature Online Advertising Industry should use sounds performance figures as soon as possible.
3rd Party Social Applications: Facebook to use the cash to acquire the thousands of applications, and application providers that fuel its website? Possibly, however, wouldn’t it be cheaper for Microsoft to acquire those directly? Are they paying for convenience or for the concern that further ties between Microsoft products and internet application will continue to have a significant price in the European courts.
‘Shrinkage’: The renown male phenomena, introduced in one of ‘Seinfeld’’s chapters, seems to have hit the Online Media space. It is clear that Google, AOL, Yahoo! And Microsoft is creating a consolidated advertising opportunity for their prospective clients. Microsoft is paying for the shrinkage of the long tail, trying – like its peers – to create a one stop shop for advertisers. The model is similar to the one successfully deployed by the Networks for the TV world. Differences:
Content, Audience and Consumption patterns are still fragmented and might prove difficult to package into an upfront model advertising basket.
Microsoft, like others, will need to build an impressive network technology platform that will enable efficient deployment of advertising dollars across this fragmented offering.
Unlike the stable, for many years, TV environment, the online space is constantly changing. In my opinion due to the fact that internet has yet to establish itself as the main platform for premium content. It is still used predominantly as a repository of information and remote human interaction facility. When content arrives, and it will, the rules of the game might change and will diminish valuations of current investments.
The Internet as a Night life scene: Many have mentioned this before. Online properties, especially the ones utilized for remote human interactions, are transient. Like night clubs, they create an exciting atmosphere and establish an attractive fashion for a limited period of time. Facebook, like many other properties online will need to reinvent itself at some point. As it grows, rapidly it seems, this task will become more and more challenging.