Measurability and Creativity

Google has successfully pushed the advertising industry towards a much higher standard of accountability with their performance-based pricing model. It has been a critical factor in their enormous success.

Advertisers spend roughly $150 billion in the US each year and most will tell you they are not really sure what works and doesn’t. By offering advertisers a clear measure of success (only pay when someone clicks), Google is providing some definition to one of the most inefficient marketplaces in history.

Traditional media formats like TV, Radio and Print are now under much greater pressure to prove their value. In a recent issue of The New Yorker, Ken Auletta writes about a 2003 meeting between Mel Karmazan (who was COO of Viacom at the time) and Google’s Eric Schmidt, Sergey Brin and Larry Page.

Karmazan was incredulous that Google was creating such a highly measurable system that would starve the media planning and buying process of all creativity and emotion. “You’re fucking with the magic,” he said only half in jest according to Auletta.

There is no doubt that the media buying and planning industry needs to become more accountable and measurable, but not at the expense of it’s creative, emotive, entreprenurial and risk-taking nature.

The industry always has to have a place for people who can come up with ideas like this:

Daffy's Live Movie Theatre Ad: During selected evening showing of "Amelia" at the massive Zigfield Theatre in Manhattan, 10 live dancers took to the stage accompanied by music and images on the screen behind them and performed a 3-minute ad for Daffy's.

Google Needs A Local Sales Partner

One of the initially compelling synergies of the AOL-Time Warner merger was to use Time Warner Cable’s 1500-person local ad sales organization to sell geo-targeted AOL ad placements to their local clients.

The idea made a lot of sense. Local cable advertising was becoming a force to be reckoned with, quickly building share at the expense of newspapers, radio and broadcast TV. The typical cable system at the time was inserting advertising on 50 or more national cable networks creating an environment where sales executives were comfortable packaging and selling a broad collection of properties. Local advertisers wanted to better understand emerging online marketing opportunities and AOL was the biggest player.

Unfortunately, as it is well known now, AOL had very little ad sales infrastructure at the time. Cracks started appearing on the national side and there was very little attention left for local. The project was disbanded just a year or so after being introduced in 20 markets.

Time Warner Cable quickly built their own digital offering, an automotive dealer listings service called BeepBeep.com that today is an important revenue driver for the company and a key source of differentiation from the other local traditional media outlets.

Comcast, with a sales organization twice the size of TW Cable’s, has had similar success with their own automotive offering, Vehix.com.

At both companies, the local ad sales executives, most steeped in the world of 30- second commercials and other traditional media formats, were quick to embrace a new media platform that enhanced their business opportunities and professional development.

More importantly, both initiatives showed how large local traditional media ad sales organizations could leverage their relationships and coverage to introduce new digital media offerings.

The largest radio, newspaper, yellow pages and local broadcast companies all have massive local sales organizations supporting core products that are in decline. Look for them to start aggressively adding new digital offering to their portfolio just like Clear Channel’s recently announced ad sales partnership with Pandora.

Earlier this week it was reported that Google has its sights set on the local market with a new fee-based search model that dramatically simplifies search advertising for local businesses. (Most local advertisers have been reluctant to engage in Google's traditional bidding and optimization process.)

Gordon Borrell, an infuential local media researcher, was quick to note that infiltrating the local market will not be easy for Google. As he said in Paid Content, “Local media is sold, not bought.”

Will Google go it alone or partner with a big traditional media company?

All Companies Are Now Media Companies

PR firm Edelman Communications recently released a white paper summarizing key insights from a social media summit they hosted in Washington DC a few months ago.

The summit was attended by some impressive players including marketing heads from some of the biggest companies and the Chief Technology Officer for Obama’s presidential campaign. 

One key take-away: the importance of all companies to now see themselves as media companies.

“Companies no longer have to filter their content and messages through the media; they have the means to create and distribute their own content – and potentially to advance their own reputations – through the channels they choose.”

It seems every day we see another noteworthy example of this - most still representing a small part of the company’s total marketing commitment, but still, a clear indication of a new order.

• Whole Foods has one of the largest followings on Twitter (1.5 million followers) - more than almost every mainstream media brand and personality.
• The Pringles fan page on Facebook, one of the most popular based on fans (2.8 million) and time spent, has quickly become a multi-media social networking hub featuring photos, videos, comments, games and contests.
• Johnson and Johnson’s BabyCenter.com is now the largest parenting site in the world.
• Hasbro recently purchased a 50% stake in a new children’s cable network being launched by Discovery Communications.

Ironically, most of the summer was spent focusing on the upfronts – an outdated marketplace where billions are spent by leading advertisers to air 30-second commercials in programming produced by others that appears on networks owned by others.

And while many of the brands still see tremendous value in the reach and impact provided by the big media companies, look for them to more aggressively launch their own content and distribution networks, often using the established media outlets as partners in these efforts.