Information Squid

Jeremiah Owyang (of Web Strategy by Jeremiah) comments on Twitter: “users dont want to pay fofr social networks. thus the need for monetizations…enter advertisements”.

Users don’t want to pay for anything, but that doesn’t mean nothing is ever paid for. Still, it’s particularly challenging to charge for social networks. They’re all scrambling for users, because the network effect ensures that larger networks will grow more quickly. Charging users reduces the number who’ll sign up, the number who’ll tell their friends to join, and your network’s attractiveness to potential acquirers.

So how can you charge for a social network? The usual way: you don’t have the most users, you have the most relevant users. It’s the same strategy used by business schools (a lot of whose value is in who you meet) and professional societies (where you can learn from others and be seen as a leader in your field). You’re paying to join a particular social network (in the offline sense) because the others in it are people you want to know. Oh, and there are some other benefits like classes, conferences, etc. The Well has had essentially this business model for years.

On the other hand, creating a network of most relevant people also works extremely well if you’re selling advertising. Look at ModelsHotel, a selective “gated community” for models from top agencies, profiled in the Wall Street Journal and then on TechCrunch in September. As the Journal says, “It’s this promise of exclusivity that is drawing sponsors to the site. Among its high-profile marketing partners: eccentric fashion design house Heatherette, Diesel jeans and luxury jeweler Piaget.”

So the upshot? Make your social network either big or specific, and specific is a whole lot easier to pull off. If you can get the right people to feel invested in your site, if you can grow a community, then yes, you can charge for access to that community. It’s up to you whether you charge the participants directly or take their time with (hopefully ever more relevant) ads - but I’m hoping in the current ad-a-minute glut that more places will opt to ask for my money instead of my eyeballs.

ETA: Jeremiah asks how much would you pay for a social networking service; Business Week discusses social networking with the elite.

ETA 2: Washington Post article says Online Networking Goes Small, and Sponsors Follow, 12/29/2007

BBDO Netherlands, working for Chrysler, recently created a viral video ad for the new Dodge Nitro SUV. The ad showed the car electrocuting a dog. Chrysler was not pleased. (And they’ve had problems with BBDO Detroit’s ads before.)

Chrysler apologized and tried to have the video pulled from YouTube - apparently without initial success (it’s now down, “due to a copyright claim by DaimlerChrysler”). And the video has spread, to the Detroit Free Press, Jalopnik, SpikedHumor.com, and probably elsewhere.

It’s hard to pull an ad these days. Anything controversial will spread. Even if your ad airs once in an obscure market, or is placed only on a few low-traffic websites, if it’s interesting then someone’s probably made a copy to put online - and they’ll be rewarded with plenty of hits for doing so. (The most prominent example of a small ad buy provoking amazingly more free media coverage is the Swift Boat ads against John Kerry in the 2004 US presidential election.)

There have been media stories about ads being squashed for a long time, but the new element is that people can read the story and see the ad for themselves. It’s not one-day news. An ad you pull can still go viral, being forwarded from one person to another and being copied to too many sites too fast to stop.

But isn’t this what the advertiser wanted in the first place? Chrysler noted in its apology that “European commercials — especially ‘viral’ ads like this one — are often edgier,” so it seems likely that BBDO Netherlands knew its market. The comments at SpikedHumor are mostly amused. The previous BBDO Detroit ad, where a car gets a jump from a Nitro and is blown into the sky, seems different in degree of attack by the Nitro rather than in kind of attitude of the car. Even if this isn’t the brand message Chrysler wants (and if it’s not, they apparently haven’t conveyed that to BBDO anytime in the last six months), hasn’t this controversy helped reach the Nitro’s target audience?

Following up on the concerns about how to use Yahoo SmartAds, the answer is probably to use a souped-up creative optimizer, ideally hooked into the ad serving system itself. That way you can analyze your results and then show your most effective ads most often (or modify the less effective versions). Creative optimization has been around for a while for search campaigns, trying to improve performance for certain keywords. Advertising.com in November 2006 released a study of keyword performance using three optimization techniques.

It’s harder to find information about optimization solutions for advertising, perhaps because everyone is trying to keep their methods proprietary. WPP’s (Ogilvy’s) mOne developed a tool called mEuclid and publicized it in 2005. That seems likely to be the same tool mentioned in The Quest for the Perfect Online Ad (Business 2.0, 4/3/2007). The Atlas Institute of aQuantive has done some writing about creative optimization (also in 2005), though the referenced white paper says to worry more about ad placement than about exactly what’s in your creative.

Still, given the option to have potentially thousands of combinations of ad components, agencies that take advantage of SmartAds will need a way to manage and analyze the data they collect. Erick Schonfeld’s The Next Net picks up the same concern about how many items marketers will need to juggle. Seems like Ogilvy has a good setup already - I wonder whether the other agencies are behind or just quiet?

Via Nick Wright’s Vir(tu)al Marketing and Media, online video and its inserted ads are getting more and more press.

Google launched an AdSense for video pilot at the end of May. Google Video has had ads since the beginning of the year, so presumably the insertion technology is coming from that program. Their setup allows the video creator to choose when in the clip the ad runs.

But picking the timing of an interstitial ad is only one possibility for advertising in online video content. Collected from several recent articles, here are some of the options:

Pre-roll or blipverts, before a clip starts
Midroll or interstitial, sometime in the middle of the clip
Post-roll or endcap, after the end of the clip
Bug or superimposed logo, not clickable
Bug or superimposed logo, when clicked pauses video and opens link in a new window
Bug or superimposed logo, when clicked opens additional ad content within the video frame
Ticker, generally across the bottom of the screen, like cable news channels
Link from items’ images in the video content to where you can purchase them
Sponsorship information inserted into the content
Show an advertiser’s video every certain number of other videos

What options did I miss?

The articles:
Make Way for Must Stream TV, Business 2.0, 3/1/2007
Will Video Ads Evolve?, Forbes.com, 2/23/2007
Video Ads: Every Startup Has a Different Solution, TechCrunch, 7/6/2007
The Revolution of Video Advertising, Entrepreneur.com, 5/30/2007

Just finished watching the (fabulous) Wimbledon final between Federer and Nadal. Aside from the amazing tennis (the one sport I turn on the TV to watch), I was fascinated by a great Nike ad, in a format I don’t remember seeing before.

Essentially, the ad plays as a human interest segment, like the ones larded onto the Olympics every five minutes. It’s not identifiable as an ad for most of its playing time.

We hear “He was born in Basel, Switzerland…” with pictures of Roger Federer as a baby, kid, “started playing tennis at six years old.” Roger playing tennis. “He could have been a soccer player, but chose tennis.” Roger in a soccer uniform, then playing tennis again. Roger as a young adult. “He once had a temper,” throwing rackets, “but found his cool - and became a champion.” Lifting the champion’s cup at Wimbledon (the first time). “His forehand is feared by all.” More action shots. “He’s the only player to win three majors three times.” More lifting trophies. “He’s definitely the man to beat. His name is Roger Federer. He’s won ten majors, and counting.” More playing time, more dramatic music.

And then the music stops, and we cut to the top of a baseball cap, and a very familiar face looks up. “But my name is Tiger Woods. I have twelve majors and counting. So keep up, buddy.” Just do it tagline on screen, Nike swoosh and nike.com.

Did I mention this ad is a 60? The length, along with the adulatory words, music, and images, make it seem like editorial content, not an ad. And the production values and sense of humor mean it doesn’t feel like a waste of your time even after you hit the Nike tagline.

The best touch? After Federer finally won his five-set, dramatic title match, the ad played once more. And this time, it said, “He’s won eleven majors, and counting.” Beautiful job, Nike.

Separate from all the hoopla this week about the iPhone, advertising has also made a leap forward. Yahoo has announced a system called SmartAds for on-the-fly composition of display ads - meaning a firm could set up an ad for an item the user has recently searched for, with its price in their location, as well as images/colors appealing to their demographics. The system can use behavioral, geographic, and demographic information to pick ad components.

This isn’t the first system to use behavioral information, but it seems to be the first offering customization at the level of parts of ads rather than at the level of the whole image. So then the problem is figuring out how to use it.

The NYTimes’s Bits blog brings up the point that most companies don’t know yet how to take full advantage of behavioral targeting. Thousands of versions of an ad are hard to manage - how do you tell what’s working? Tracking the clickthrough information will be as much work as tracking web analytics for a good-size website - especially as companies move toward microsites in display ad spaces. Will this become a new specialty within marketing/advertising companies?

NYTimes article (registration required)
NYTimes’s Bits blog
Wall Street Journal (subscription required)
CNet
Editor and Publisher
ClickZ
Search Engine Land
PC Magazine’s AppScout blog
Red Herring
New Media Age (UK)
NewsFactor.com
Marketing Shift blog

Just saw a new ad from the National Association of Realtors for realtor.com that was fascinating in light of my current reading of Everything is Miscellaneous and past reading of Don’t Make Me Think. In the ad, realtor.com is pictured as a gigantic warehouse-type store, with colonial style houses in this section, mortgage lenders down that aisle over there, and helpful salespeople pointing the way.

And I just finished reading the section in “Everything is Miscellaneous” where David Weinberger discusses how much better Amazon’s system of multiple classifications is than Staples’s physical store requirement of a single place per item. In fact, if I go to realtor.com and say I’d like to find a house using advanced search, I’m presented with a form that lets me choose one or multiple criteria. The actual system is more like Amazon’s (well, in having multiple options at least), in spite of the ad’s suggestion that Staples is the right model.

So why does the Realtors’ ad promote the wrong model of their website? Possibilities:
1. They’re counting on their audience to know it’s a metaphor and take away only the friendly, helpful, organized attitude of the ad.
2. The ad’s audience might not be particularly comfortable with the web, so the Realtors think relating the site to something the audience is familiar with might help them.
3. The experience of the site does look like the warehouse - after you enter the information you want, you get neat classified shelves of colonial style houses if that’s what you asked for - but the warehouse can be differently organized for everyone.
4. The ad agency simply didn’t understand this was the wrong model.

My guess would be some combination of 2 and 4, with 3 hopefully becoming more clear to a site visitor after they’ve clicked around for a while. 3 is the promise of Weinberger’s book (I hit the point on my evening commute today where repetition of his core idea began annoying me - 175 pages to go!).

But there’s an additional problem with the ad. Where’s the helpful salesperson? In “Don’t Make Me Think”, Steve Krug talks about making each choice obvious. If I’m lost in Staples and want to know where the three-ring binders are, I ask a salesperson - and in the Realtors’ ad, someone does ask for directions. If I’m lost on realtor.com and want to know where the mortgage lenders are, there’s actually no Help section. I’d better know they’re in Home Finance - or be lucky enough that clicking randomly gets me to the right place. That’s a failure of content and navigation, and could destroy the ad’s good impression.