Putting Your Marketing Budget Where the Trust Is

The latest Nielsen Global Online Consumer Survey has been released, and it serves as yet another reminder of just how little consumers trust what brands and marketers tell them. The report should provide Social Media practitioners with further support for increased spending on Social Media, since it is clear the way for brands to earn trust is to get consumers talking to each other.

Just 55 percent of consumers have any degree of trust (defined by Nielsen as respondents indicating they "completely" or "somewhat" trust information) in the emails they sign up for, radio ads, and billboards. A slightly higher percentage--around 60 percent--trust the information they receive from advertising in magazines, in newspapers, and on television. Despite Federal law, enforced by the Federal Trade Commission, that requires advertising be truthful and fair, barely half of consumers trust what brands say in their marketing communications.

Traditional media fared pretty poorly in the Nielsen report, and some forms of online marketing scored even worse--far less than 50% of consumers expressed any degree of trust in search engine ads, banner ads, and text ads on cell phones. But the news was much better for Public Relations, Digital Marketing, and Social Media Marketing, because those are the areas in which consumers have the greatest level of trust. The four highest media for trust were:

• Recommendations from people known: 90%
• Consumers opinions posted online: 70%
• Brand Web sites: 70%
• Editorial content (e.g., newspaper article): 69%

It comes as no surprise that consumers would trust the opinions of people they already know, but I think it is a little shocking to consider the trust placed in the opinions of others with whom they are unfamiliar. Think of it this way: Consumers more trust the unsubstantiated, unregulated, anonymous, and grammatically dubious ramblings of complete strangers than they do the expensive, carefully-vetted, beautifully-executed, government-regulated ads placed on TV, radio, and in print.

If you read Experience: The Blog regularly, you'll recognize a recurring theme is that marketers must stop focusing so much effort on broadcasting messages at consumers and put greater effort toward engaging consumers with marketing that is respectful, desired, authentic, personalized, conversational, and valued. The findings of this Nielsen report add to the evidence that the shift toward more social and influence-inducing marketing is vital.

If you are a marketer at an organization, here's a quick exercise: Check your budget for the amount being spent on media buys; now compare this to allocation for PR, your Web site, and Social Media (even assuming there is a Social Media line item). My guess would be few (if any) marketing budgets in 2009 assign greater investments to Social Media, media relations, and digital marketing--channels that earn the greatest level of consumer trust--than to buying media.

To be fair, trust is just one emotional component of advertising, and there are obviously tasks for which print and TV ads are better suited than Web sites, Social Media, and PR, such as broadcasting a tightly-defined message with a great deal of scale. Still, how valuable is broadcasting a message in a medium in which almost half of consumers feel no degree of trust? (We can now respond to John Wanamaker's famous complaint, "Half the money I spend on advertising is wasted; the trouble is I don't know which half." It's the half of all media lost to a lack of trust on the part of the target audience!)

There are signs that budgets are shifting toward Social Media. In March of this year, eMarketer reported on a study by the Aberdeen Group that found "63% of the companies in their survey (defined as best-in-class) planned to increase their social media marketing budgets this year." One in five companies expected to increase their Social Media spending by more than 25 percent, and another 16 percent were planning for an increase of 11 to 25 percent.

This is good news to be sure, but the big percentages may hide what is still extremely modest investment in Social Media. In the same month the Aberdeen Group report was published, Adweek described a Forrester Research study that found "75 percent of marketers have budgeted less than $100,000 for social media efforts over the next year." That great big 25 percent increase could bring Social Media Spending in many companies from $100,000 all the way up to $125,000 (roughly enough to add a Social Media intern)!

Brands certainly cannot give up mass media, but in an age where consumer perception of advertising messages is being filtered through layers of mistrust and marginalized by cynicism, the time has come to make a serious commitment establishing our brands in the ways consumers trust. Soon, being the loudest and broadest messenger in a medium consumers don't trust simply won't count as much as being the most authentic, available, and accessible brand in the media consumers do.

Blogs in the Marketing Mix: Four Measures of Blog Credibility

In my last blog post, we explored the recent "Social Media Ad Metrics Definitions" report from the Interactive Advertising Bureau (IAB). In this report, the IAB attempts to define metrics for Social Media, including methods for establishing the credibility of blog authors; unfortunately, the report didn't go nearly far enough on this matter.

Since blogs are increasingly important to marketers and because blog credibility is so vital but difficult to establish, it seems beneficial to explore this topic further. Based on research conducted into credibility on the Web, I suggest there are four dimensions that separate the credible and worthwhile blogs from the ones marketers should avoid. These four dimensions are Independence, Affinity, Transparency, and Presentation.

It is easy to see why brands are increasingly turning attention to blogs for marketing and PR purposes. In our newly Social world, blog traffic is increasing while traffic growth to traditional media sites is slowing. In the past year, traffic to Blogger and Wordpress went up 44% and 50% respectively, while traffic to CNN, MSNBC, and the New York Times went up an average of just 17%.



Brands have many ways of leveraging the growing power and reach of blogs. In addition to launching their own blogs, brands may also sponsor blogs, target blogs for outreach and PR efforts, advertise on blogs, recruit bloggers into networks with special access to new products and information, and pay for posts (sometimes called "sponsored conversations.")

But all blogs are not created equal, and brands must proceed with caution, particularly when it comes to participating in networks that promise to play matchmaker between brands eager for blog attention and bloggers interested in a share of marketers' budgets. While third-party blogger networks may give the appearance that purchasing recognition and mentions on blogs is a cinch, the wrong impression on the wrong blog can do more harm than good.

Evaluating which blogs are right for your brand requires consideration of factors that include reach, relevance, and credibility. Reach refers to the audience for a blog, including total number of readers, subscribers, and visits. Relevance concerns the extent to which a blog's content and audience is appropriate to the brand; this can be determined by evaluating the number and frequency of blog posts on a given topic, the blog's organic search results for desired terms, and the percentage of readers or visitors that match desired demographics.

Credibility, the third dimension that determines if a given blog is right for a brand's outreach or sponsorship, is perhaps the most difficult to ascertain. Reach and Relevance can be determined by quantitative measures, but Credibility is more qualitative. Blog credibility has dimensions that include:

Blog Independence

Blogs that are already sponsored--even if the sponsoring brands are not competitors of your brand--have diminished value. In addition to the number of sponsorships, the quality of the sponsors should also be assessed.

Also, marketers should be cautious of working with blogs that have a noticeable number of paid blog posts ("sponsored conversations"). The presence of sponsored conversations can create brand clutter on a blog, but more importantly a large number of paid posts undermines the author's trustworthiness to readers. An endorsement from a blogger that rarely promotes brands is far more valuable than an endorsement appearing on a blog with many posts that begin, "This is a paid, sponsored blog post."

Finally, blogs that have a lot of ads or advertising of poor quality also reduce the perceived independence. In 2002, the Stanford-Makovsky Web Credibility Study found that advertising on a web site caused a reduction in the credibility of the site, and that pops-up ads and advertising that was difficult to distinguish from content caused substantial reductions in site credibility.

Quantitative measures of Independence: Ratio of sponsored conversations to total posts; Number of ads/sponsorships evident on each page.

Qualitative measures of Independence: Types of brands that sponsor or advertise on the blog; types of ads that appear on the blog.

Blog Affinity

A blog may be independent from other brands but still have a mission or point of view that is inappropriate for a particular brand. Unlike Relevance, which measures specific content and key terms that appear on a blog, Affinity is a consideration of how the brand's values match the blog's. For instance, a sponsored conversation about a new SUV will not be considered credible if it appears on an automotive blog that supports environmental causes and frequently criticizes vehicles with poorer fuel efficiency.

Problems of affinity or context are not new in online marketing, and marketers seeking to purchase advertising or sponsored conversations should heed the occasional missteps that have occurred with contextual banner ads. For example, it might have seemed a good idea for a travel company that offers experiences with sharks to use "sharks" as a keyword, until it caused their ad to appear beside the article, "Shark Kills Man Off San Diego Coast." In this case, the lack of affinity between the article and the ad reduced the ad's effectiveness.

Qualitative measure of Affinity: Before sponsoring or attempting to establish relations with a blog, marketers must take the time to evaluate each blog and ensure the correct affinity between blog and brand values.

Blog Transparency

As paid and sponsored conversations grow in frequency, a blogger's adherence to WOMMA ethics disclosure requirements must be an absolute requirement before a reputable brand establishes any commercial arrangement with a blogger. While sponsored blog networks such as IZEA claim to monitor blogs for obedience to rules intended to promote ethical behavior, it is important advertisers understand they and not the networks have the onus to ensure ethical behavior with respect to the advertisers' brands.

There are two reasons marketers should not rely on blog networks to police the ethics and disclosures of bloggers. First, WOMMA's Marketing Ethics Code of Conduct states (emphasis mine), "We require marketers to effectively monitor disclosure of consumers involved in their word of mouth initiatives." Secondly, in the event a blogger is caught passing off sponsored blog posts as unpaid editorial content, the damage will be much greater to the brands involved than to the network.

Quantitative measure of Transparency: One hundred percent of advertising and sponsorship on a blog must be clearly identified as such.

Blog Presentation

You already know this about your own marketing materials and Web sites, but spelling errors, poor grammar, and unattractive or unusable design undermines credibility. In a study of health site credibility conducted by Eysenbach & Kohler, it was found a professional design was strongly associated with perceived credibility.

Even though the standards for grammar and design may be lower on blogs than on brand or mainstream media sites, a recent study, "The Impact of Anonymity on Weblog Credibility," found that "the writer of the well-formatted, error free blog was more credible than the writer of poorly presented blog."

(Interestingly, this same study found that the quality of writing had no influence on the credibility of the blog itself, but the author notes this may be due to the use of students rather than a broader set of study participants. I suspect students are likely to have a much higher tolerance for grammatical errors than would older consumers and professionals.)

Quantitative measures of Presentation: Grammatical and spelling errors are easy to check. You might review a number of recent blog posts manually or use tools such as WebSiteOptimization.com's free Web Site Spell Checker.

Qualitative measures of Independence: It is recommended brands evaluate whether a given blog meets minimum standards for attractiveness, usability, and professionalism before associating the brand with that blog.


These four attributes--Independence, Affinity, Transparency, and Presentation--are important determinants of a blog's credibility. These are not the only factors that enhance or diminish credibility, but they are among the most important. Other factors that may be important, depending on the blog and brand, include Blog Attribution (the more frequently sites and blogs attribute their sources, the more credible they will be perceived) and Blog Reputation (presence of awards, Diggs, etc.)

In the future, it may be possible for marketers to assess blog and blogger credibility through automated means. A group of researchers in Austria is developing a system that analyzes words in blogs and compares them to words used in mainstream news sites as a means to estimate credibility.

It remains to be seen whether or not automated systems will ever be able to accurately assess attributes such as Independence, Affinity, Transparency, and Presentation, so for now marketers are advised to approach blog advertising and sponsored conversations with caution and to retain the responsibility for evaluating each and every blog. Networks may promise easy access to a large number of blogs, but you've spent too much time and money building, nurturing and protecting your brand to leave its stewardship to others.

Social Media In-Stream Ads: How to Lose Friends & Alienate People

If I gave you a nickel, would you say good things about me to your friends on Facebook and Twitter? How about if I gave you ten cents to post a link to my blog with a positive endorsement?

Are you offended? Do you think it's up to me to earn--rather than pay for--your goodwill and recommendations? Is the trust of your friends worth more than a couple of pennies?

That's okay, I agree with you, which is why "in stream" Social Media advertising is about as bad an idea as I've heard since "Social Media" entered marketers' vocabulary. I would not and am not recommending this ad tactic to clients, because I am concerned it could harm brands, increase complaints about advertising ethics, and be a terribly ineffective use of marketing dollars.

Of course, that's not to say that encouraging people to say kind things about our brands isn't vitally important in our newly social world. But let's recognize the cardinal importance of authenticity in Social Media and the Grand Canyon-sized chasm in authenticity that separates paying for Social Media buzz and earning it. Marketers have a wide variety of tools available to them to spark positive sentiment in Social Media, the laziest and most dangerous of which is "in stream" advertising.

The idea behind "in stream" advertising is that you are a media mogul. Yes you! In the age of Social Media, each of us is a mini publisher/broadcaster with our own readers/viewers. Your and my reach may not equal the New York Times' or ABC's, but the idea behind Social Media in-stream ads is that the eyeballs we command are worth no less than those controlled by big media conglomerates.

Of course, those aren't eyeballs; they're friends, peers, and family members. To those who believe in in-stream advertising, that's the holy grail--our friends trust us, and so a product we promote in our Facebook or Twitter status updates comes with built-in attention and authenticity.

But is that really the way it works if the brand is paying for the mentions? Is that authentic? Are you authentic if you engage in this sort of activity? How many times can you spam your friends before they start unfriending you, not just on Social Networks but also in real life? Which brings me to wonder who, exactly, would do this to his or her own friends?

The answer is that, contrary to advertisers' belief they are buying the authenticity that comes from one's friendships with others, the kind of people who prostitute their status updates aren't doing so to friends but to strangers. Since people with larger networks can earn more in-stream ad dollars, this encourages participants to amass "friends" by any means possible.

At best, these in-stream Social Media ad networks encourage people to spam friends, and at worst they encourage spammers to create spam profiles to disseminate spam to wide networks of strangers. (Any ad technique that requires the word "spam" to be used three times in a one-sentence description is clearly on very thin ice.)

And as the cherry on top of this spam sundae, this sort of advertising is unethical unless the people who get paid to post advertising reveal it as advertising. Failing to disclose one is being paid to promote a product is a violation of the Word of Mouth Marketing Association (WOMMA)'s ethics code.

So, what sort of brand would engage in this sort of flawed, dangerous, and dubious advertising technique? Apparently (and disappointingly), brands are lining up. StatusPlug, a new network for spammy Facebook updates, has not revealed any clients as of yet, but TwittAd is bragging about its Land Rover campaign and the other brands who are in discussions for Twitter ads.

In the AdAge article, the CEO of TwittAd says, "We were worried it would be considered spam, but we didn't get a single complaint [about Land Rover]... What that tells me is that our connectors have influence." Funny, what this tells me is that it is easier to unfollow a spammy tweeter than to track down and complain to the spammy Twitter network that paid him or her to spam.

It is easy to see the value (or lack thereof) that TwittAd offers--check out the list of sponsorable profiles on their site. For a mere 58 cents you can sponsor angelguy1's Twitter account; over half of his tweets to date have been about getting paid for advertising in his Twitter feed, which is probably why he has just 14 followers. And for just $918, you can sponsor the misspelled, fraudulent "Official Joe Jonas Brothers" Twitter account, @JoesephJonas. With this sort of quality and authenticity, how could brands possibly lose?

While it's disheartening to see brands jump at the chance to pay for Social Media profile and update advertising, there are many brands who are taking a better route. For example, Ford has recruited 100 "agents" who will be given the new Ford Fiesta to test drive for six months. It is hoped they'll love the car and will share that excitement with their wide social networks. And General Mills has created MyBlogSpark, a network of blogging mothers who will be provided with General Mills product samples to review.

Even these efforts have been the subject of some criticism. For example, the General Mills network requires bloggers to contact the company before posting negative sentiment, which has caused some to question if General Mills is exercising "prior review" and if bloggers will have free rein to say what they want. (A General Mills spokesperson assured Adweek that those in the blogger network "are free to write anything they'd like.") Also, Adweek found a half dozen product review posts that didn't disclose the relationship with General Mills as required.

Time will tell if Ford and General Mills generate the desired success from their campaigns, but it is hard to find fault in their carefully conceived and executed strategies for developing authentic positive buzz in Social Media. Yes, it is more expensive to launch a buzz-sparking campaign of two-way dialog with consumers than it is to buy in-stream ads, but the positive difference in authenticity, transparency, and influence is absolutely worth it.

Of course, there is an even better and more organic way to develop positive sentiment in Social Media: Focus obsessively on having your product or service create a great, memorable, emotional, and brag-worthy experience for consumers.

A report on Social Media sentiment that I received today from Techrigy.com notes that Disney garnered a great deal of positive sentiment last week in Social Media. They didn't buy in-stream ads and they didn't give away free vacations; instead, Disney did what Disney does best--create positive consumer experiences. The favorable buzz generated last week came from things like people posting their fun Disney World vacation pix on Flickr, travel bloggers sharing a new Disney World deal, and people praising Disney for planting 2.7 million trees for Earth Day.

Inventor Edwin Land once said, "Marketing is what you do when your product is no good." As a marketer, I clearly don't agree with that, but the thinking behind that statement is more true today than it was decades ago when Land famously uttered those words. The better your product or service, more memorable the experience, and stronger the bonds with consumers, the less a brand needs to even consider paying people to spam their friends!

Social Media ROI: Be Careful What You Promise (Part One)

I'm old school, so we're going to play a fictional version of Family Feud with Richard Dawson and not John O'Hurley or Al Roker:

Richard: "Welcome to another edition of Family Feud. We surveyed our audience of Internet marketers and asked for their top gripe about their discipline. What do you think is number one on the list?"

Contestant: "Internet Marketing is held to different standards of measurement than other media."

Richard: "Survey says... (ding, ding, ding) Internet Marketing is held to different standards of measurement than other media! A whopping 80% gave that answer!"

Okay, I really don't know that 80% of Internet marketers would complain about online tactics being subject to more stringent standards of measurement than other media, but I'd wager it is the top gripe of those in my industry. I would estimate that in my career, I have heard that grievance at least 200 times in meeting rooms, over drinks, at conferences, and in online forums.

The common complaint takes a form something like this: "My CMO wants to know the click rate and conversion rate for every banner ad and every site each month and expects my team to improve upon it month after month. They'll spend ten times as much on print media without knowing the response rate, but I can't spend a dollar without eight metrics in place!"

Who should we blame for our boss' and clients' intense focus on measurement of online tactics? Look in a mirror. You and I are responsible for this problem. (To be fair, you are not responsible if you haven't been involved in online marketing and media for at least seven years.)

As the Web matured, those of us in the field of Internet marketing couldn't talk long or loud enough about the measurement of Internet media. It was our key to the vault where the marketing budget was kept. "Give us budget," we said, "and we'll show you the ROI of every penny spent." And so, it should come as no surprise that the keeper of the vault has come to expect we'll demonstrate results for every banner ad, every media buy, every microsite, every redesign, every Search Engine Optimization effort, and every email campaign.

The expectations we set about online measurability have become a double-edged sword--on the one hand, we face intense short-term pressure to incrementally improve every tactic, and on the other hand, we've found that we really cannot prove (in most cases) the Marketing ROI (MROI) of our efforts. To be sure, there are plenty of things that can be measured online (click rates, time on site, conversion, etc.), but actual MROI is a different matter. To use an analogy, I can look at the stats for two teams at the end of a football game (rushing yards, completions, interceptions) and make an informed guess at who won, but trying to derive the margin of victory from those stats is a different matter altogether.

The one exception to the MROI challenge is that those in the direct marketing/retail business can link the cost and corresponding results for some online tactics such as online banners and PPC ads. Take the costs of an ad, compare it to the margin on the sales that directly result from the clicks on that ad, and you can validate MROI. But for many of us this linkage is far more complex, tenuous, and difficult to prove. If you don't sell online, if purchases are transacted not with your own organization but through a distribution channel, or if your goal isn't sales but instead is to change minds and to increase awareness, consideration, loyalty, or offline action, then closing the loop for MROI is a much, much greater challenge.

I mention this because we are in danger of setting unreasonable expectations again. Is Social Media measurable? Yes. Should we measure it? Of course. Can we prove the ROI of Social Media. Perhaps, but not without considerable effort, planning, and investment. In my blog post tomorrow I'll share my thoughts on why I believe MROI is so difficult to determine and what I believe are the best methods to estimate the MROI of Social Media and other marketing tactics.

Adquake Strikes Hollywood (and Everywhere Else)

The earth is shifting under the feet of people in Hollywood (and New York and everywhere else where big media and marketing are found). No, it's not an earthquake; it's an adquake.

The television industry is being shaken by rapid changes in technology, consumer tastes, and demographics. For decades, the role of television in the marketing environment was assured--to reach a large audience with a branded message that appealed to the emotions, you used television. The combination of universal reach, barriers to entry for competing networks and media, and video delivery assured television of its lucrative place and caused the media mix to change very little for many years.

But in recent months, we've seen a series of news reports that validate what we already know: Television is losing viewers and thus its confident place atop the marketing portfolio.

In February came news of a new IDC study of consumer online behavior found that the Internet is the medium on which online users spend the most time (32.7 hours/week), almost twice as much time as spent watching television (16.4 hours).

In April, Microsoft announced it would take advantage of the Internet's growing power to deliver video to broadband-connected consumers and offer its own original slate of programming via its Web properties. Also in April, the New York Times featured an article about Naked Communications, a new type of agency that helps brands determine their appropriate media mix; one brand executive praised Naked's "media agnostic" mindset and said it was a fresh approach to "not presume that you have to have a 30-second TV spot.”

In May, Forrester released a report that showed that consumers ages 18 to 27 are spending less time with television and more time online. The reported showed that in just three years, time spent using the Internet has risen 80% while time watching TV is down 15% among this demographic.

In June, MediaPost shares a study from Ipsos MediaCT revealing that among those who have streamed or downloaded video content, which is 52% of Americans age 12 and older, the share of video viewed on television dropped while the video viewed online had grown from 11% to 19% in just one year. The study found that consumers age 12 to 17 view just 55% of their video on TV and 24% on a computer. Also in June came a report from Magna Global USA that noted that even though just 25% of TV homes have a DVR, "the current impact of DVR viewing on ratings is twice as high as the impact of VCRs when they were in 90 percent of TV homes." What this means is that ad-zapping DVRs already account for 9 percent of the Big Five networks’ TV ratings, and 15 percent of viewing by adults 18-49.

The adquake continues this month with a study released by Magna Global that demonstrates TV is no longer within its own target demographic. Television has long bragged about its ability to reach the 18-to-49-year-old demo, but "the five broadcast nets' average live median age (in other words, not including delayed DVR viewing) was 50 last season". (The median age for U.S. households is 38.) Such is the impact of gaming, the Internet, cable, and DVRs, that network television is losing its ability to reach its traditional core audience.

The adquake is already being felt in the network's pocketbook. The big network's ad revenue fell two percent in 2007 while all ad spending was up slightly (0.2 percent). Internet ad spending was up 15.9 percent last year, but the shift in media spend is nowhere near complete. Despite the demographic and TV viewing changes noted above, ad spending on network television was 135% greater than on the Internet, and the ad revenue for all television was almost seven times that of the Internet.

The adquake presents real challenges for marketers. As has been noted on this blog, online display advertising isn't much of an answer for marketers seeking to shift dollars out of TV advertising. Online ads are seen as untrustworthy, annoying, and ignorable; plus, ad blocking software threatens to decrease ad viewership on the Internet in the same way the DVR is used to screens ads by those who time-shift their TV.

Despite the challenges both online and on television, I think these are exciting times for marketers. The old way of marketing had become stale and--let's face it--boring. There were few challenges to advertising on TV and in print; with demographics, media outlets, and technology stagnant, the focus was entirely on the message and not the medium. There was a belief back when I started in marketing that a brand only needed to find the right tagline to create relevance to an audience.

But today, marketing is so much broader and deeper than it was 20 year ago. Rather than focusing on just the graphic, headline, or copy, we marketers have become as creative as film makers, theme park designers, and game developers. Successful campaigns aren't simply about finding the right ad to place in the same old spots; it's about finding the right combination of strategy and experiences to engage consumers in fun, interactive, and fascinating ways.

We've gone experiential, and its a change to be embraced! The adquake will continue for years to come--probably for our entire careers--as mobile, social, and other media we cannot yet imagine change consumer media habits, expectations, and relations to brands. The marketers who succeed will be the ones who learn to shift as quickly as the adquake changes the world around us.

Fine Art Threatens Online Advertisers

Lovers of art may rejoice, but online marketers will cringe at the news of a new Firefox plug-in that inserts fine art in place of banner ads and other online advertising. As discussed on the blog Experience The Message, this is "Another example of the growing empowerment of the consumer, and a resounding example of art trying to subvert commerce -- something that is usually done the other way around."

Marketers can no longer ignore consumer's growing power and control of all media. On this blog, I often refer to the consumer backlash against our ad-saturated world and encourage marketers to think less about the valueless interruptions of consumers' lives on which we've all come to rely and instead focus on the kinds of value-added marketing consumers desire and will seek out. I don't for a moment believe that every dollar spent on brand-controlled marketing (such as TV and online ads) can shift to consumer-controlled media (such as advergaming, social media, and branded content), but clearly a significant shift is underway and is nowhere near completion.

The Experiential Marketing Continuum has been discussed frequently here at E:TB. This concept attempts to define the openness, acceptance, and availability of consumers to various marketing media. For example, one end of the Continuum is where you'll find marketing channels that consumers find so offensive that they seek laws to prevent marketers from using those tactics. Examples include adware, spam, and telemarketing.

The next step up the Continuum are legal marketing means that consumers dislike to such a great degree that they'll pay to avoid marketing messages in these channels. In a world of free TV and radio, consumers spend money on DVR hardware and subscriptions, on satellite radio access, and on MP3 players. In part, consumers spend in this way to increase their control of the media they see and hear, but a large justification for these investments is to eliminate the advertising that interrupts and (in the perception of consumers) detracts from the viewing and listening experience.

Online display advertising is one of the less-welcome forms of advertising, akin to what TV and radio advertising has become. This category includes both pop-up advertising and banner advertising.

The desire to block pop-up and -under advertising has become so common that browser software routinely comes with this capability set to default. Crafty and annoying online marketers constantly seek to defeat anti-pop-up measures, an effort that leaves me scratching my head. If consumers hate the tactic that much, why would a marketer want his or her brand associated with this kind of advertising?

I guess we'd have to ask Netflix that question, since they seem to be the largest brand that uses pop-up advertising. The sad answer may be that it works as a direct marketing tactic, but I wonder if they've thoroughly explored the negative feelings their pop-up ads engender with consumers. (Or maybe Netflix simply knows the future of video distribution is online and sees that their days sending movies to people via the postal mail are numbered, so they're wringing everything they can from their brand today and simply don't care what the consumers of 2013 will think of their brand.)

While the percentage is still small, a large number of consumers have downloaded and are using ad blocking software to eliminate or decrease display ads from their web surfing experience. Ad blocking has become so common and accepted that PC World, a Web site that relies on advertising revenue from online advertisers, named Adblock Plus one of its Top 100 products for 2007. The number of daily users of this software has increased from 1.4 million to 3.3 million in just the past year (although it has seen a drop in the past month, which I suspect is due to the new Firefox version that has just been released.)

Add Art is just one of many ad blocking applications, and their number will only grow. And as more Internet users visit sites while blocking those sites' ads, this will put pressure on Web publishers to find other ways to increase revenue. It may be that consumers will be forced to pay for the content they wish to see (although the challenges to converting a site from being ad-supported to being paid are very significant, and in fact most sites have done the opposite in recent years because consumers simply aren't willing to pay for content when so much if it is already free).

Online display advertising is not about to go away, but perhaps we marketers might consider ways to encourage consumers to view our ads rather than to find ways to block them. For example, stop overlaying content with your ad--consumers find this annoying. When executing an ad that includes an animation appearing over content, be sure the "Close" button is evident and easy to find rather than forcing consumers to find a tiny "X" button amid a cluttered ad. And ads that never stop blinking are irritating, so online ads should repeat several times and then stop. These are all obvious best practices for online display advertising.

The more important way marketers and publishers can keep people seeing their ads is to make sure these ads are relevant. I'm 45 years old, successful in my career, and financially stable--why do I continually have to see online ads for debt consolidation and online degrees? They annoy me (and I suspect they annoy you, too). If ads were better targeted to consumers' needs, they'd pay more attention.

Even better than targeting and relevance is to produce advertising that consumers actually want to see. Just look at this year's Cyber Lion winners: a screen saver that is almost a work of art, banner ads that create two-way communication, and an alternate reality game that motivated consumers to engage for thousands upon thousands of hours.

Marketers that continue to pursue the interruption method of marketing may spur immediate clickthroughs, but are encouraging consumers to think worse of their brand and are hastening the consumer backlash against ubiquitous marketing. It takes effort and creativity, but there are more welcome and more experiential ways to reach consumers!

Should you use Firefox and be interested in seeing art rather than ads, here is how Add-Art works. The first two minutes are about installing the software; after that, you can see the functionality and results of using Add-Art:

Introduction to Add-Art from Steve Lambert on Vimeo.

Man vs. Banner Ad

The video below is a lighthearted look at something quite serious to online marketers--the poor quality and annoyance of online banner ads.

Banners ads have become cheap, and I mean that in two senses of the word--CPMs are ridiculously low, and many of the ads are perceived by consumers as annoying, seedy, and gaudy. This makes banner ads easy to ignore, or in the words of this funny video: "Most banner ads aren't harmful to humans, provided you leave them alone and avoid making direct eye contact."

Studies show that consumers hold banner ads in very low esteem. Late last year Nielsen reported that consumers find banner ads the second least trustworthy ad medium; only mobile banner ads were seen as less trustworthy.

I think the reason for this is pretty easy to discern; just look at Yahoo's home page tonight. Yahoo is the second most trafficked site on the Internet, and their home page should be a spot for high-quality brands to advertise. Instead, the home page currently has banner ads for online degrees and free credit reports.

Why would a marketer wish to have their brand promoted in this same spot in the future, after visitors have been educated to ignore, or worse yet, to think poorly of the products advertised here? It's a little like placing an ad at the back of a local publication among the pages where consumers expect to find dating and phone sex ads.

Speaking of which, Web sites and online ad networks may be well advised to take a cue from Manhattan Media, which purchased the New York Press and immediately banned sexually-oriented ads from the publication. The company noted that while it would “initially take a financial hit by dropping sex ads...the long-term growth prospects for this widely circulated newspaper (will) dramatically increase as it is remade into a reputable publication.”

High-quality sites would be better off to reserve prime online real estate for high-quality brands, even if this means accepting lower ad rates in the short-term. The practice of providing inventory to the highest bidder--no matter how chintzy the product, brand or creative--is degrading consumer perception of online ads.

Neither Political Candidate Votes for Online Display Advertising

An article from Mediaweek notes that online ad buyers are "disappointed, puzzled, even a little impatient" with the fact the presidential candidates are spending so little on online display advertising. "For March, comScore’s Ad Metrix tool found that Obama ran 18.1 million impressions, versus 7.2 million for McCain. To put it in perspective, McDonald’s—hardly a huge spender on the Web—runs 300 million impressions in a single month, while top 10 advertisers like Netflix can run 5 billion."

Some expected this would be the election when ad money flooded to the Internet, but as one sales director put it, "This was not the year it all went digital."

Of course, the fact the candidates aren't ponying up for display ads doesn't mean the Internet hasn't already been a huge factor in the 2008 election. As the graph below demonstrates, traffic to the candidates' sites is still trending upwards and totals in the millions each month.

And if there's any doubt as to the importance of the Internet, you need only hear John Edwards comment that the Internet "is the only reason that Barack Obama is not taking public financing" or read the report that "Obama has raised a record-shattering 287 million dollars since the start of the campaign, fueled by more than 1.5 million small donors who give repeatedly over the Internet."

Then there's the news-making viral video "Yes We Can," which has been viewed approximately 15 million times on YouTube (and millions more times at DipDive.com and other video Web sites). Approximate cost to the Obama campaign of this emotional and much-viewed video? Zero for production; zero for distribution.

The role of the Internet in modern politics is not without legitimate questions. For example, Ron Paul has been incredibly popular on the Internet but has earned relatively few votes in the primaries. Still, it's hard to overlook the role the Internet has had, particularly in Obama's campaign. It's been crucial to the candidate going from underdog to front runner, gaining the kind of awareness that delivers huge crowds to his public appearances, and setting records for fundraising.

So given the Internet has been crucial thus far in the 2008 election, why is this not reflected in online ad spending? I believe there are several reasons:

• Political display ads preach to the converted: Obama supporters know how to find BarackObama.com and aren't prone to clicking on a John McCain ad, and the reverse is true for McCain supporters. As the campaign enters the homestretch, I expect the candidates may find interesting uses for rich media, such as rollover video ads that play inspirational messages that energize their base and encourage voter turnout. But with the sides fairly well drawn and only about 10% undecided, there seems little reason for the parties to start spending on online ads.
  
  
• Advertising isn't necessary for the candidates to stay top of mind: With banner ad click rates at microscopic levels, the goal of many online display ad campaigns is to keep brands top of mind and not to encourage immediate direct action. Are awareness and consideration really the challenges for McCain and Obama? If the ads won't encourage supporters of either candidate to click and if consumers are already 100% aware of their options, how would banner advertising benefit the campaigns?
  
  
• Online advertising lacks control: Ad buyers would disagree, but there is risk with online advertising. Even the most carefully plotted campaign can result in an ad running adjacent to unflattering content or on an inappropriate site. Mitt Romney's campaign made headlines and appeared clueless when banner ads for the pro-family, anti-gay candidate appeared on Gay.com and FanFiction.net, where amateur authors frequently post homoerotic stories of relationships between Spock, Captain Kirk, and Doctor McCoy. With presidential campaigns hinging on reputation, neither candidate can afford a misstep, particular with so little to gain with online advertising.
  
  
• Online display ads aren't presidential: There is an inherent problem with the way consumers have come to perceive display advertising--they see it as having low credibility, and it's easy to understand why. As CPMs have dropped, the quality of many ads and advertisers have become embarrassingly bad. When the front page of the site of respected news organization CNN includes debt-reduction ads featuring dancing aliens or video ads purposely disguised to create confusion between advertising and content, it trains consumers to associate the ad medium with brands of poor quality. Recent reports on the top online ad spenders reveal that low-value advertisers such as LowerMyBills, Classmates.com, and free credit reporting services are among the top-spending online advertisers.
  

There will be a time for the campaigns to spend on online advertising in the months to come. As the election draws near, the parties will turn up the heat on the undecided voters. There may also be a defensive strategy to be considered; as 527 groups begin to run attack ads, the candidates may find themselves spending to combat negative campaigning or to knock those ads off of top sites.

The 2008 campaign has laid bare the strengths and weaknesses of Internet marketing: Experiential and viral marketing have worked, and display advertising is but a small component of the marketing mix. The emotional "Yes We Can" video created a huge surge of traffic and attention for Obama without a single ad, and both candidates have relied on Word of Mouth to deliver site visits, campaign contributions, and volunteers. With both traditional and Social Media buzzing about the election and stirring videos creating pull, neither campaign sees value in 468- x 60-pixel banner ads.

Citi Thinks Google Should Wallpaper the Internet with Display Ads

I was quite disappointed to read about the report issued by Citi analyst Mark Mahaney suggesting Google exploit the "opportunity" to monetize site traffic by pushing display advertising on every page they serve on certain properties.

I am not a high-priced financial analyst, but I do know that Google has succeeded in historic proportions by doing exactly the opposite of what Mahaney recommends. While other search engines and sites pasted blinking display ads wherever they could, Google instead put itself into the position of being the preeminent provider of search services to consumers and search advertising to marketers by providing a clean, user-focused interface. Perhaps Mahaney would be well advised to look at how Yahoo and MSN, with their pages of display ads, are performing compared to Google.

Mahaney's calculations provide some interesting insight into how miserably display advertising is performing on the Internet. To calculate how much incremental revenue Google might earn with display advertising, he started by computing the estimated CPM (Cost per Thousand) of advertising on MySpace. His calculations show that display ads are commanding just $1.13 CPM. That strikes me less as a financial figure than an indictment of display ad value and effectiveness. The impact of display ads are so minuscule, and consumers are so immune to them, that each view of a banner ad is worth just one-tenth of one penny.

Mahaney forecasts that plastering display ads on YouTube, Google Maps, Google Images, and other Google properties could add $1 billion of additional revenue in 2009. That sounds like a lot, but Google's revenues were almost $17 billion last year.

Google won't turn up its nose at a possible revenue increase of 6%, but I'm sure they are assessing Mahaney's suggestion with great caution. I don't have access to Citi's report, but according to the info posted to TechCrunch, it appears that Mahaney did not consider the potential negative ramifications that could come if Google includes display ads on every YouTube, Map, and Images page:

• Will users abandon Google? On this blog, I've frequently mentioned how fickle Internet audiences can be. MySpace ruled the social media roost just a couple years ago, but once consumers perceived it was becoming too commercial they began an exodus to Facebook (which many feel is now becoming too commercial, as well).
  
  While today it's hard to imagine consumers abandoning YouTube or other Google properties, it isn't out of the question. Nor would it take a mass exodus to eviscerate Mahaney's proposed display ad strategy--if consumers begin to leave Google for other sites, Google could damage the commanding advantage it has in search advertising. Google shouldn't be too quick to kill the goose that laid the $16.6B golden egg in search of a mere $1B more. I question if Mahaney has fully investigated the potential risk of his proposed display ad strategy.
  

• What is the impact of so much advertising inventory entering the market? As noted, the CPMs for online ads are already quite a bit lower than they were in past years. What would be the impact of having Internet traffic giant Google enter the display ad market with an additional 1 trillion ad pages annually (725 billion for YouTube, 235 billion for Google Images, and 14 billion for Google maps)?
  
  According to the Interactive Advertising Bureau, in 2007 display advertising revenues totaled $7.1 Billion. Mahaney is suggesting that new display ad opportunities could add $1 billion to Google's top line. So, it seems he is suggesting an expansion of total industry-wide display ad revenue of 14% in one year, and we can surmise this also means display ad supply will increase somewhere in the range of 14%. An increase this substantial in the supply of display ad inventory would exert even more downward pressure on CPMs, thus decreasing Google's potential gain.
  

I'd be disappointed to see Google significantly increase its display advertising in the coming year. I believe the company has greater and more profitable avenues to explore by offering consumers ever better tools and sites and advertisers more targeted ad opportunities. Google may find far more revenue than Mahaney is proposing by continuing to explore how it might revolutionize traditional ad media in the same way it has online advertising. And Google sees more opportunities for revenue and profit in the burgeoning mobile space.

More importantly, it seems to me Mahaney is neglecting to consider Google's brand. The company has always been respectful of its Web visitors and aware of how little value banner ads provide to either advertisers or to consumers. The sudden appearance of animated banner ads on a trillion Google pages doesn't strike me as congruent with Google's brand or their world vision.

Just a couple weeks ago, Google CEO Eric Schmidt shared his view of how online advertising will work in the future. He said, "The advertising has to be more entertaining, more interesting, more immersive compared to what we have today." Citi's Mahaney is suggesting Google offer more of "what we have today" while Schmidt sees more experiential and welcome ways to market to consumers.

I predict Google will not embrace the Citi report's suggestion that they step backwards by pushing at consumers some of the least successful and least welcome online ad media; instead, I believe Google will find innovative ways, both online and off, to provide value to consumers and advertisers.

Short Takes: 6.10.08

Here are some interesting XM and online marketing news items and links for your perusal:

• The Top Video Site for Teens Is...: Since none of you (I am guessing) are between the ages of 12 and 17, this news may surprise you: According to Nielsen Online's video measurement service, the top video destination for teens is... no, not YouTube... Stickam. Most of you probably haven't even heard of Stickam (unless you have teens in your household). The site is a live webcam chat community that permits subscribers to have video chats with up to 12 people at once. Other features include the ability to capture and share video, photos, and audio.
  
  Some early press has focused on the unseemly uses for Stickam video chat, particularly among teens old enough to know better but young enough to think their inappropriate video stream won't end up on YouTube. Stickam is trying to transcend this reputation by attracting bands, DJs, and entertainers. For example, indie rockers Story Told installed a 24-hour webcam in their living room, allowing for a constant conversation between band members and fans. The band credits this exposure for sparking 10,000 downloads of its album.
  
  
• Web Video Ads to Increase 50% per Year: IDC tells us that Web Advertising will double from 2007 to 2012. The growth of online ad spending will vault it from "the number 5 medium all the way to the number 2 medium in just 5 years," with a growth rate eight times greater than advertising at large.
  
  IDC is forecasting much of this growth will come from the shift of video advertising from television to online. Internet video ad revenue will grow sevenfold from $0.5 billion in 2007 to $3.8 billion in 2012 at a CAGR of 49.4%.
  
  Video advertising promises to be as successful on the Web as it has been on television, but it seems quite apparent it will take a much different form between these two media. Consumers are rejecting the current TV model of lengthy disruptions filled with numerous 30- and 60-second spots, and they seem much more accepting of the ad model found on sites such as ABC.com and Hulu, which feature much briefer ads that cannot be skipped.
  
  Successfully migrating video advertising from television to the Internet will take care to understand how the two media are different. While it might be desirable from the brand perspective, it seems very unlikely that broadcasting the same 30-second spot on TV and online will be a workable ad model.
  


• Speaking at a Conference? Get Twitterized: Speaking at a conference has always been a great way to get noticed in your industry. It's also been a good way to embarrass yourself if you show up unprepared, if your public speaking skills need polish, or if your presentation is too focused on selling your company and not enough on providing value to listeners.
  
  In the old days of two years ago, news of a great or horrible presentation would travel slowly. But today, thanks to Twitter and other social media, speakers face a room full of people, but they might be speaking to many times more than that. Not only may your words and information travel quickly and widely, but critiques of your performance and insights can be broadcast before you even leave the podium.
  
  Unnerving? Perhaps, but you aren't powerless against the power of your audience's Tweets. Check out the insightful post on the Influential Marketing Blog, which can help you prepare for and manage the social media aspects of public speaking in 2008. Tips include creating your own Twitter account, using search and tracking tools to monitor buzz on your presentation, and responding to Tweets so you can be part of the discussion that occurs after the event.
  
  
• The Importance of Brand Personality in the Age of Social Media: Sun Microsystems' blog features a brief and thoughtful interview with Rohit Bhargava, a founding member of the 360 Digital Influence team at Ogilvy (and publisher of the aforementioned Influential Marketing blog.) He has words of caution for brands that believe personality is created through social media. Bhargava notes that personality is about more than just social media; it starts with "being unique, authentic, and talkable."
  
  He challenges brands to consider "personality moments." For example, do you have a story to tell, do your employees know it, and do you let them spread the word? Do you fall into the trap of "featurespeak," focusing too much on the product and your pitch? No interaction with a consumer is too small--for example, what is the error message users get on your website when the reach a broken page? When you send your customers products, what message does the packaging provide?
  
  Check out the blog for more provocative questions, such as what to do if your brand personality isn't sticking. (Hint: If you're authentic, it will stick.)
  

Gen Y's Continuing Media Shift and What It Means to Marketers

It's no secret that consumers are spending less time with traditional media, and it's certainly no surprise that consumers--particularly younger ones--dedicate a good chunk of their lives interacting with digital media. But sometimes you see the cold, hard data confirming what everyone "knows," and it's startling.

The data I found expected yet still somehow surprising came from Forrester's report, "Building Gen Y’s Multichannel Media Profile." Is it flabbergasting to find that consumers ages 18 to 27 are spending less time with television and more time online? Of course not, but the speed and breadth at which the changes are continuing to occur are striking.

Consumer leisure activities tend to change very slowly over time, unless some important societal factor intervenes, such as during times of war. But there's been no seismic societal changes over the past four years--the Internet is no longer new, and the biggest digital changes we've seen since 2004 are the growth of broadband, a wider adoption of digital music, and increases in the capabilities of Internet-enabled cell phones. (Yes, I know we're in a time of war, but let's not not get started on how little attention this war gets or how little sacrifice it is demanding from the American public, okay?)

But with just minor changes in the online and media landscape, there's been a significant shift in the media consumption of Gen Yers in the past three years. Time spent using the Internet has risen 80% while time spent listening to the radio has fallen 26% and time watching TV is down 15%. Those are profound changes in just 36 months.

Of course, it's not difficult to understand why this is happening. The younger Gen Yers don't remember a time before the Internet existed and have grown up with email, the Web, chat rooms, e-commerce, and online games. And even for the oldest of the Gen Y generation, the Internet was a vital part of their high school and college experience.

Still, it's interesting to note that the digital media habits of this group are still evolving. They aren't simply taking consistent online habits with them as they age; they're continuing to adopt to a new lifestyle of "living online." Three years ago, they spent 60% more time watching TV than being online, and in 2007 this demographic dedicated 1.6 more hours to their Internet time than to television.

The marketing implications of this continued shift away from traditional media and toward digital media are significant, and made even more so by the fact Gen Y's income will skyrocket in the coming years. According to eMarketer, Gen Y's annual income will rise from $1.89 trillion to $3.48 trillion in the next ten years, growing to near Gen X's income ($4.2 trillion in 2017) and eclipsing Boomer's ($2.96 trillion).

What happens when a large group of consumers see swift increases in discretionary income and rapid changes in their media habits? Marketers' worlds change very, very quickly.

We already know that marketing budgets have been shifting away from print, TV, and radio towards online tactics, but it's apparent this shift is just getting started. With the ROI for display and search advertising already getting squeezed by increasing demand and cost (and consumer indifference), and with Social Media continuing to prove an advertising challenge, the ways in which marketers can invest their budgets in online media are going to continue to change and get ever more creative (and experiential).

The marketing challenge of the next few years won't primarily be one of how to allocate dollars to different online ad types (search versus display; banners versus skyscrapers; ad network A or B), but instead will be how to engage consumers and provide real value. It will become even less about campaigns and more about consistent relationship building. How a brand looks will be far less important than how it acts. What you say won't matter; who you are will.

These years will be heady times for marketers in organizations that are marketing centric and consumer focused where being transparent, agile, open to change, honest, confident, and willing to experiment and take risks is a way of life. For everyone else--companies that focus on campaigns and advertising and not consumer experiences; that believe they can be one thing but brand themselves another; that strive for control; and that lack respect for and trust in their consumer--the next five to ten years will be confusing and threatening.

Within a few years, Gen Y will be spending twice as much time online as they do with television. They'll be learning more about brands from each other than from your advertising. Will you be part of the conversation and creating the sorts of experiences that will get consumers saying positive things about your brand? Or will be more concerned about whether you get better clickthrough from a 468-x-60 or a 120-x-600 ad unit?

Short Takes: 5.31.08

Here are some interesting XM and online marketing news items and links for your perusal:

• Google Cool to Web 2.0: On this blog, I've shared several news items and thoughts about the difficulties with making advertising work on social media (or Web 2.0) sites. It turns out Google agrees; Google CEO Eric Schmidt touched on these challenges in an interview, saying, "The web 2.0 architecture is not necessarily a revenue opportunity. This is not where the money is." And about Google's well-publicized advertising deal with MySpace, Schmidt noted, "MySpace did not monetize as well as we thought. We have a lot of traffic, a lot of page views, but it is harder than we thought to get our ad network to work with social networks."
  
  But Schmidt isn't closing the door entirely on social advertising. He thinks some sort of advertising may work on social media services, and he predicts it will need to be more experiential. Says Schmidt, "The advertising has to be more entertaining, more interesting, more immersive compared to what we have today." In other words, if you're going to interrupt consumers' conversations on social sites, you have to make it worth their while!
  
• Do We Really Need To Be Reminded To Include Our URL In Ads? I suppose this is an interesting report, but in 2008 I'd hope no marketer would need a study to know it's a good practice to include your Web address in print ads. According to MediaPost, the Magazine Publishers of America is releasing a study showing that including URLs in magazine ads drives readers to advertiser Web sites.
  
  The analysis of 833 print ads in seven magazines showed that ads with Web addresses were up to three times as likely to drive readers to a Web site, depending on the magazine category. The biggest increases came in the home, women's service and travel categories. So, be sure to include those URLs in print ads. In fact, include them everywhere!
  
• Internet Advertising Continues Its Growth: The Interactive Advertising Bureau and PricewaterhouseCoopers have released their full-year report on Internet advertising. If you follow online marketing, there is little surprising in this report:


• Full year 2007 Internet advertising revenues set a new record, totaling $21.2 billion, up 26 percent versus full year 2006 revenues.
• A handful of ad-selling company control most of the market; the top ten ad-selling companies accounted for 69 percent of total revenues in the fourth quarter of 2007.
• Search continues to command the biggest share of online ad dollars, with 41% of the total spend. Display advertising (which includes banners, rich media, digital video, and sponsorships) accounted for 34% of online ad revenue.
• Most online advertising is performance based (such Pay Per Click or Pay Per Action). Approximately 51% of 2007 full year revenues were priced on a performance basis, up from 47% reported for full year 2006.
• Internet advertising is now the third largest category of advertising spending behind Newspapers and TV Distribution. Internet ad spending is now slightly greater than that of cable or radio.

The chart I found most interesting was the one comparing ad spending for the first 13 years of the Internet (1995-2007) versus broadcast television (1949-1961) and cable television (1980-1992), presented in current inflation-adjusted dollars. Thirteen years into this new medium, Internet ad revenues stand at $21.2 billion annual. After the same period, television ad spending was $11.7 billion and cable was just $4.8 billion.


• Can Incentives Work to Boost Mobile Advertising? Harris Interactive released a study in which they asked consumers if they'd view advertising on their cell phones in exchange for incentives. A "surprising 35 percent" said would accept incentive-based advertisements; of that total, 78% say the best incentive would be cold hard cash and 63% said free minutes would be effective to get people to view ads on mobile phones.
  
  The implication seems to be that because consumers say they'd accept incentives to watch advertising that this provides some path for marketers to test in the infant mobile marketing channel. The concept of paying people to view ads has never worked in any channel; this revenue model simply isn't viable. Moreover, while survey participants may express a theoretical interest in getting paid to view ads, the reality of receiving a few pennies to see ads is never appealing in practice.
  
  The Harris survey also throws a bit of cold water on one of the most promising aspects of mobile advertising--that advertising effectiveness can be increased by using cell phone users' preferences in order to tailor ads to meet their interests and needs. Just 35% of teens said they would give away their personal information to advertisers even if there is an incentive.
  
  Mobile marketing is going to be huge in the future, but anyone promising easy marketing solutions with personalization or incentives is not learning lessons from the past.

Mobile Marketing Won't (Primarily) Be Ads (For Long)

Obviously, cell phones aren't new technology, but for most U.S. consumers, smart phones and the mobile Web are relatively novel. As cell phone capabilities grow, so to do new opportunities for marketers, but those of us in the business need to learn from the past and consider with caution the early success that is being reported with mobile banner and text ads.

Cell phones provide multiple ways for marketers to engage consumers, but many brands are thus far approaching mobile marketing in somewhat traditional ways: with banner and text ads. This approach--testing in a new medium something that worked in older media--has been repeated several times in the digital era. For example, in the early days of the Internet, the first marketing tactics borrowed from the paradigm of print advertising, and soon banner ads were appearing beside content. Another example is the way many marketers are testing Digital Signage by repurposing static print ads or existing video television spots.

When traditional advertising methods are brought to new technologies, the ROI experience can be predicted with some confidence: The first brands to try a tactic will enjoy initial success, encouraging other brands to follow suit. But as that tactic becomes more common, consumer attention and results decrease, forcing marketers to find more creative uses of the technology. For example, early Internet banner ads, because they were unexpected and new, saw significant click rates; the exuberance over this early success helped create the dot-com bubble, which burst in part because click rates plummeted as banner ads went from new to ubiquitous to annoying to ignorable.

Since mobile ads are still new, it isn't surprising to see early reports that indicate this tactic is working. According to a commissioned study by IAG, small banner ads on mobile devices result in the same level of brand recall as a :30 spot on TV. Also, the study found that "mobile banner ads produce clickthrough rates exponentially higher - at 2 percent - than online banner ads, where clickthrough rates have fallen to about 0.3 percent."

But even if tiny banner and text ads are working today, will they tomorrow? There is no reason to think that banners will succeed on the third screen any more than they have on the second screen. In fact, evidence that banner ads on phones will go the way of banner ads on the Web can be seen in the huge increase that is projected for U.S. mobile ad spending: from $878 million in 2007 to $1.7 billion in 2008 to $6.5 billion in 2012. It seems highly unlikely that a 2 percent clickthrough rate will be sustained when $6.5 billion of advertising is crammed into consumers' mobile phones.

More evidence that ROI and CPMs (cost per thousand rates) for mobile text and banner advertising will decrease can be found in the Q3 2007 Forrester Technographics report, which revealed that consumers perceive text ads and banner ads on cell phones as very untrustworthy; while more than 30% of consumers with mobile phones found brand Web sites and subscribed emails as trustworthy, less than 7% found text and banner ads on cell phones trustworthy. In addition, 48% of cell phone users found sponsored links appearing beside mobile search results annoying, and 56% said the same of banner ads at the top of mobile sites.

Some people expect that ads on phones may get a boost in the next year or two when carriers test mobile service that is free and supported by advertising. While it's not wise to bet against Google, I am dubious this approach will work in the long term. Totally free, ad-sponsored services have generally not proven economically feasible. Even television isn't free any longer--how many of you reading this actually receive free television over the airwaves versus paying for basic cable channel access? Attempts to sustain no-cost, ad-supported ISPs failed, so while CNN.com is free, your Internet access to reach the site is not.

In addition, the math doesn't really work for free ad-supported cell phones. The cost for mobile ads is around $20 CPM at the current time. This means each single view of an ad is worth around two pennies to marketers. In order to replace an $80-per-month cell phone bill, a consumer would need to see 4,000 ads each month. That's 133 ad views a day, and if each view lasts just five seconds, this would require 11 minutes of observing ads every 24 hours. My guess is most consumers won't mind the $80 bill in comparison.

If the past repeats and mobile banner and text ad results begin to disappoint, then another form of traditional advertising may flourish on cell phones: video ads. As wireless broadband access becomes common and more consumers begin to use their phones to watch video, it seems likely some sort of pre-roll or inserted video advertising may generate results. While this sort of advertising has yet to prove its worth on consumer-generated video sites like YouTube, it is working well on sites with proprietary and in-demand video content such as Hulu.com.

Of course, marketing is already flourishing on cell phones and will continue to to do so, but the most successful marketing won't involve placing or displaying ads on a phone. Instead, the best mobile marketing programs will create a welcome experience consumers enjoy via their cell phones.

One recent, terrific example of an engaging program comes from Volkswagen. Taking a multimedia approach, VW's "What the people want" campaign offers a national polling effort that utilizes voters' responses gathered online and via mobile devices and distributes the results across the Web via a site, vw.com/whatthepeoplewant, online banners and outdoor executions.

The most interesting aspect of the campaign is the 3,685-square-foot interactive billboard in Times Square. Echoing VW's new TV ads, the billboard pictures the bug parked behind his microphone, alongside the headline "The people want their voice to be heard." Using their cell phones, pedestrians text their yes or no responses to the poll questions appearing on the sign, and their texted votes are recorded live on a news ticker.

This campaign from Crispin Porter + Bogusky doesn't advertise to consumers but engages them in a dialog. It doesn't merely display something and expect the consumer to be interested; it involves consumers in something they'll enjoy, while still communicating important brand attributes and product information. This is an exciting mobile campaign that demonstrates how to tap the real potential of cell phones.

Short Takes: 5.15.08

Here are some interesting XM and online marketing news items and links for your perusal:

• "C Suite" is Wired: It's 2008, so it really should come as no surprise that highly-compensated, powerful folks are using the Internet. A mail- and online-based questionnaire that was completed by 2,390 of "America's elite business executives" indicates they're hip to technology. 54% now depend on email newsletters as their primary source of media industry news, about half have streamed or watched broadband videos from websites on their computers, and 30% read blogs.
  
  I can't imagine any B2B marketers focusing on C-level execs were holding back on exploiting the Internet to reach this audience, but if you thought all those MBAs in the corner offices were computer illiterate, here's the evidence that says otherwise.
  
  
• Facebook Failing at Advertising: Just the other day, we saw MySpace admitting that it was advertising challenged. Today it's Facebook's turn. Fortune says that Facebook is "is showing cracks in its foundation". User growth remains impressive, but users, developers, and advertisers are all questioning the current reigning champ of social media. Despite its huge traffic, Facebook earned a minuscule $145 million in revenue last year, much of it from an ad deal with Microsoft, which owns a chunk of the social site. Facebook ads can sell for as little as 15 cents CPM compared with the estimated $13 on Yahoo, and "even at those bargain prices, marketers are reluctant to spend money on a venue where users aren't paying attention."
  
  Interestingly, the buzz in recent weeks is about data portability, which will permit consumers to take their data from one site and use it on others. It's hard to imagine how sites that can't make money off of traffic today will find a way to profitability when they become little more that online databases to host consumer data aggregated across the Internet. All of this is a reminder that while social media is hot, it's still in its infancy.
  

Short Takes: 5.12.08

Here are some interesting XM and online marketing news items and links for your perusal:

• Social Networks Not the Place for Advertising? There's been some buzz that advertising on social media sites is not working well, despite the flood of traffic sites like Facebook and MySpace receive. News Corp., owner of MySpace, has fessed up that things are not going well--revenue from MySpace dropped last quarter despite increasing traffic.
  
  Maybe consumers are ready for ads based on the data they provide to social media sites. A new study found that 56% said their social networking experience would be better if marketers pushed more targeted ads and 62% said they'd be interested in offers from their preferred brands.
  
  Eventually social media networks will find a way to earn a buck from all those visitors, but it's going to take more creativity than the sorts of banner ads currently featured on MySpace. The challenge lies in consumers' fickleness; they say they want targeted ads, but if users perceive their favorite social site is becoming too full of advertising or is misusing their data, they'll jump to a different site (and it is damn difficult to win back trust and traffic once it is lost online.)
  


• Ethics or the Dangers of Social Media? The Wall Street Journal has an interesting article about studies designed to test consumers' willingness to pay for ethical products. As I've noted in the past, I am pretty dubious of studies that ask consumers to predict their own purchase behavior, since this introduces a great deal of bias to the results. Plus, the structure of studies like these can have a major impact on the results; for example, in one of the studies, they asked consumers what they'd pay for T-Shirts with different levels of organic cotton, but first they told consumers about "the detrimental effects of nonorganic cotton production on the environment." Since the average consumer shopping for T-shirts doesn't know this (and likely doesn't check the tag for fabric composition), I question the validity of the findings.
  
  But, I did find something interesting in the results worth sharing. The researchers thought they were testing the impact of ethics on consumer purchase decisions, but I think they actually stumbled upon evidence of how adverse buzz can impact a brand. The study revealed that consumers are willing to pay more for ethically-produced products, but the price premium is less than the price harm for companies with unethically-produced products. In other words, being ethical adds a little too your margin, but having it discovered you are unethical can cause deep discounting in consumer purchase decisions. I think this says as much about the need to monitor and manage your brand image on social networks where consumers are talking as it does about the need to have ethical production standards.
  

Short Takes: 4.18.08

Here are some interesting XM and online marketing news items and links for your perusal:

• A Billion Dollars in Internet Advertising is Wasted: The Internet is an exciting playground for marketers, but much of online display advertising is wasted. Banner ads have their place, but far too often they are used with too little thought, as if a marketing checklist says that X% of the budget has to go to online media, so it does. Extrapolating an Eyetools/Marketing Sherpa study, Steve Rubel of Micro Persuasions estimates that a billion dollars of online ad spend is wasted each year. The study finds that ads that appear "below the fold" are seen by only 25% of those who visit a page, and Rubel uses this data to estimate how much of the $5.1 billion that is annually invested in display advertising is totally invisible to Web surfers. The moral of this story is that creativity is needed to engage online consumers and care must be taken to evaluate media options, because not all banners are created equal.
  
  
• Advertising Beside User-Generated Content Doesn't Work Either: Today appears to be the day for sobering reports on online advertising. eMarketer has an article about the failure of user-generated content (UCG) to produce significant ad revenue. Even though the number of consumers of UCG will increase from 94 million in 2007 to 130 million in 2012, "Advertising revenues are expected to stay (modest) for some time." The article quotes Andrew Keen, author of Cult of the Amateur, who said, “Nobody wants to advertise next to crap.” There is an element of truth to this, but I think there are bigger issues than quality. The most popular UCG is edgy, sexy, violent, political, or otherwise inappropriate for many brands. Plus, UCG is about consumer-to-consumer sharing; advertising beside or in UCG is as welcome as a TV ad inserted into the middle of your vacation video. All of this isn't to say UCG advertising can't be successful; just that it takes the right brand and creative to rise above the challenges.
  
  
• Alternate Reality Games Draw Attention: iMedia has a lengthy article about Alternate Reality Games (ARGs), a new genre of advergaming that uses the Internet to create involving experiences that often span the virtual and real worlds. ARGs bridge the gap between entertainment and sponsorship by engaging "the audience with the right elements of immersive storytelling matched with the right delivery mechanisms that allow suspension of disbelief and active participation in the experience." If that sounds like geek speak, check out the case studies shared in the article: "Dead Man's Tale," an interactive experience designed to showcase both Windows Live Messenger features and "Pirates of the Caribbean: Dead Man's Chest," drew more than four million consumers who spent an average of 35 minutes playing the experience. McDonald's is currently sponsoring an Olympic-themed online game called The Lost Ring, which has attracted 150,000 players. ARGs aren't for every brand, but for the right brand and audience, ARGs can create the kind of attention and engagement other marketing tactics cannot touch.

Social Networks Will Fail (At Advertising)

Picture this: You're walking down the street, run into a friend, and start a conversation. A salesguy sees you stop and takes the opportunity to interrupt your discussion to try to sell you something. Annoying, right?

What about if the salesguy overhears you talking about your frustrations dating and jumps in to sell you a subscription to a dating service? Slightly less annoying, but still annoying.

Okay, what if the salesguy instead just dances around your conversation waving a poster-sized print ad? Okay, you get the idea.

These are exaggerated but not inaccurate analogies of what is happening on social networking sites these days. Storming out of nowhere just a few years ago, sites like Facebook and MySpace have become two of the most popular Internet spots. But there's a problem: All this popularity, buzz, and traffic isn't equating into profits for these sites.

These sites are acting as a mechanism for interaction between people. In the minds of participants, the sites are about them and not about the site owners or advertisers (which, I'd suggest, is in fact the mark of a pretty good site). But, just like like email or the watercooler, the fact people use Facebook and MySpace for discourse doesn't guarantee they'll be appropriate and effective places for advertising. Social Networks will need to find other ways to earn a profit.

We Americans like to act like the Internet is ours, but there's a social networking site that's bigger than Facebook and MySpace combined: China's QQ has as many subscribers as there are people living in the US (although this may be inflated by folks with multiple accounts). And get this--while U.S. social networks struggle to find profit, QQ made an operating profit of $224M last year; in contrast, the hottest site of 2007, Facebook, lost $50M last year.

You might think QQ has this social network advertising nut cracked, but their profit doesn't come from advertising (for the most part). Just 13% of their revenue comes from advertising; the rest comes from the sale of digital goods, games, and mobile services.

Back here in the states, the latest feeling is that widgets will provide social sites with a substantial source of revenue and profits. But, as an article on IHT points out, "the widgets currently in fashion are very 'lightweight' and do not command the loyalty of their audiences." In other words, widgets have to move beyond simple fun and games and begin to provide visitors to these sites something they'll value--something that will enhance the social experience rather than detract from it.

So, let's return to our analogy. There you are standing out in the heat and sun having a conversation with your friend. A smart entrepreneur sees this and thinks he can provide a nice venue for your future conversations. So, he builds a building and invites everyone to stop to have a fun time with friends. To make money, he plasters the walls with advertising.

It works--to a point. People enjoy the venue and he has lines out the door, but our enterprising entrepreneur finds he cannot make enough money off advertising. So, he hits on an idea--he can sell all these people glasses of Miller Lite! The idea is a twofer--not only does the owner make cash hand over fist, but his customers find that beer enhances their social interactions. He calls his idea Beer Activated Rap Session (or BARS, for short).

Sorry for the awkward analogy, but the idea here is a sound one. Social Network sites are lacking in creativity; they think they can advertise their way to profitability, but that's because they think of their users as users rather than social interactors and their traffic as traffic rather than discussions. With more creativity and focus on providing tools that enhance users' lives and social interactions, the increasingly crowded and confusing Facebook and MySpace could improve online dialogs rather than adding more and more noise to those communications.

Short Takes: 3.27.08

Here are some interesting XM and online marketing news items and links for your perusal:

• Is this the dumbest political ad idea ever? A company called Spot Runner has an interesting ad model. They offer a library of ready-to-use TV spots from which small businesses may select; paste in a logo, tweak the voiceover, and viola--a professional-looking ad ready to be placed on local TV. What seems like a fine idea for a small clothing store or pet boutique strikes me as a lousy idea for the unique world of politics, but Spot Runner is now offering stock TV ads for politicians. Given the highly personal nature of politician's records and stands--not to mention the importance of transparency and trust in candidate selection--this strikes me as a bad and potentially fatal idea for a candidate. If I were running for office, I'd rather my constituency see an awkward but genuine spot of me talking rather than get caught with a cut-and-paste tough-on-crime-in-anytown ad like this.
  
  
• We couldn't agree more! ChiefMarketer.com has an interesting article entitled, "Digital Media Issues: What to Watch in 2008." Dave Friedman of Razorfish says, "The digital media business is no longer simply about buying ad space. It's about distributing experiences through social networks, videos, widgets and applications; branded content; and ad placements." He has other insightful forecasts about the online world in 2008, so check out the article. (I like the article, but isn't it cheating to wait until the year is a quarter completed before making your predictions? Here's one of my '08 predictions: Bear Stearns is going to collapse!)
  
  
• The New York Times has an article about a cool little viral campaign for Scion. Launched by Strawberry Frog, ScionSpeak.com gives users the opportunity to create their own coat of arms, using hundreds of cool designer components. The campaign engages their target audience's love for customizing their rides. You can download your artwork, or arrange to pay to have the shield painted on your car. That's my Scion coat of arms at right.