The promise of internet advertising was that it could provide much more targeted audiences with far better, precision results.
It turns out the truth is different, with Bloomberg citing Heineken US who did a detailed analysis of their advertising returns to find, as the company’s Brand Director Ron Amram says, “giving money to the mob.”
While that news is bad, although not altogether surprising, for the digital media industry there’s even an even worse revelation from Heineken.
Digital’s return on investment was around 2 to 1, a $2 increase in revenue for every $1 of ad spending, compared with at least 6 to 1 for TV. The most startling finding: Only 20 percent of the campaign’s “ad impressions”—ads that appear on a computer or smartphone screen—were even seen by actual people.
That major brands are television is three times more effective than digital puts online advertisers in a bad position, although social media gurus have long argued companies can’t measure return on investment from their efforts.
Ultimately though the Bloomberg story shows we need a new model, applying broadcast advertising conventions to online services isn’t working. We’re still waiting for a new David Sarnoff to come along.
In the meantime though we’re almost certainly going to see more aggressive ‘native content’ – adverts posing as articles – as publishers try to find revenue and advertisers attempt to get their message across readers can expect more desperate attempts to get attention.
Those cheering for the end of the current advertising model should be careful of what they wish for though, the scramble for revenue and eyeballs is going be unseemly as we enter the era of the blocked advert.
Social media influencer programs are challenging the ethics and pockets of PR and bloggers
So after five years about posting about food, travel, tech, fashion or reverse cycle widgets you’ve being listed by Forbes Magazine as one of the most influential voices in the field.
Now every morning in your inbox is another pitch from an agency offering you freebies and access in return for posting about their clients products, some are great while others are strange.
Welcome to the world of Influencer Programs, a strange hybrid bought about by rise of social media and the collapse of printed news. As overwhelmed salaried journalists at established media outlets have less time to deal with hundreds of PR people desperately trying to get their attention, those with decent social media followings start to look attractive.
The influencer theory
A key part of the PRs strategy in engaging with social media outlets are the influencer programs, where the agencies trawl Instagram, Facebook, Twitter and the other services to find those with large followings and then try to induce them into promoting their clients’ products.
These influencer programs are not anything new, while today we associate them with Kim Kardashian and Will.I.Am, in the 18th Century Josiah Wedgwood publicised his sales to the royal courts of Europe to generate sales for his earthenware and a hundred years later Mark Twain endorsed cigars in journals across America.
So congratulations on being the modern Mark Twain, now you have to decide if you want to play with Fat Fee Media and be part of their influencer programs.
The land of the free
Most of the time the initial approach from the nice folks at Fat Fee will try to get you to work for free in exchange for a shiny laptop, a free feed or even an overseas trip to The World Reverse Cycle Widgets conference.
That might work for you, if you have a full time job and the food blog or fashion Instagram feed is a hobby then this exactly what the influencer programs were originally designed around although there might be some quirks there
Should the blog be a business, or you take the distinctly unfashionable attitude that your time as a creative content creator is actually worth something that Fat Fee Media should pay for, then things get messy.
People die of exposure
The first response for payment from the nice folk at Fat Fee Media is that working with their client will be wonderful exposure for you.
In some respects this is probably true, however the reason Fat Fee Media has come to you is because their clients need exposure more than you do. Just the fact you’ve been listed as an ‘influencer’ shows you have credibility on the interwebs.
One of the traps many of us with consulting businesses on the side is the belief that doing a favour for BigCorp will open future paid opportunities. Sadly, the truth is somewhat different.
Pay the writer
“It’s the amateurs who make it tough for the professionals” says Harlen Ellison in his wonderful Pay The Writer rant. “By what logic do you call me and ask me to work for nothing.”
Ellison’s point is well made and those working for free are marked down as amateurs by the large agencies. Be under no illusion, when the paid consulting, speaking or writing gigs become available, the folks giving away stuff for free on the influencer programs won’t be getting them.
While Samsung’s behaviour was extreme, it’s by no means unusual. It’s common in these programs’ agreements to have ‘exclusivity’ or ‘no disparagement’ clauses.
The exclusivity clauses are particularly pernicious because they limit the scope of your writing and could even lock you out of future paid work in the industry you cover.
Controlling the copy
Another weird, but common, part of the PR control freakery in influencer programs is the determination to vet everything so only Nice Things are said about their clients.
This never ends well as the agency and its client spend the next six weeks rewriting your work. Inevitably the results look like something published in the Ministry of Public Works house newsletter.
Even if your blog or Instagram feed is just a hobby resist any request from agencies to pre-vet your copy. If they insist, send them your advertising rate card and tell them to hire a copywriter.
You can’t say bad things
The ‘non-disparagement’ clauses are equally pernicious. One of the curiosities of the social media world is that corporates are horribly risk averse.
As a consequence they don’t want the possibility of bloggers or the Twitterati saying nasty things about them and the non-disparagement clause becomes part of almost any agreement.
These clauses are usually far ranging, not only do they stipulate a blogger can’t say something less than glowing in a post but they also restrict any social media commentary on that business.
A recent agreement I was presented on behalf of one of the world’s biggest banks required me to say I wouldn’t say anything nasty about them. This is a curious way of shutting people up but one can’t blame them if it can be done cheaply for the cost of a meal or conference invite.
Happy shiny people
Ultimately the social media and digital media worlds are about happy and shiny. Given they are largely controlled by large corporations, this isn’t surprising and much of the attitude that you shouldn’t say bad things online comes down to how food, fashion and travel bloggers have regurgitated nice things rather than been genuine critics.
To be fair to the new breed of online writers, the dumbing down of travel and food writing was well underway in the mainstream media before the arrival of the internet. One could argue that mastheads devaluing their brand with puff pieces was one of the reasons alternative online media, particularly in food blogging, became so successful so fast.
A broken model
In truth, the whole social media engagement industry is broken, it depends on poor measurements and old school marketers applying 1960s Mad Men broadcasting methods to an industry that’s diffuse and diverse.
Over time, new more effective models will develop but the for the moment this is the way business is done as we wait for the new David Sarnoff.
Ultimately for influencers the question is whether you’ll keep your own respect and that of your audience. Just don’t expect the corporates and their agencies to respect you in the morning.
Rubenstein joined AppNexus as employee number 18 in 2009 and has been part of the company’s growth from a small startup to a global technology company with a workforce of 1,000 professionals.
AppNexus is one of the new wave of companies managing and programming online advertising, helping advertisers and publishers target their products better while giving ad tech companies deeper insights and data.
In this interview, Rubenstein discusses some of the forces changing global advertising along with the challenges of dealing with a high growth business.
Facebook and Google both put their users first in their latest updates. It’s something other business should consider.
Over the last few weeks much has been written about Google’s mobile search update that went live on Wednesday, some said it would be the death of small business on the internet while others claimed it would be the end of corporates online.
While all the focus has been on Google’s search changes Facebook quietly made a change that will probably be more vexing for many businesses.
Both Facebook and Google are struggling with making their services more useful for users, with the Google changes the intention is to make search on mobile devices more useful in giving preference to websites that work on smaller screens.
In a post on Google’s webmaster blog, Developer Programs Tech Lead Maile Ohye answered the basic questions about the search engine changes which dispelled much of the hysteria and myths about the update. The main point of Ohye’s post is that Google want to show users useful information.
Facebook have a similar problem, they have to balance the often competing interests of their users and advertisers with the main aim being keeping visitors on their site for as long as possible.
The objective of keeping users engaged is the reason for a series of tweaks Facebook announced this week that change the newsfeed visitors see.
The goal of News Feed is to show you the content that matters to you. This means we need to give you the right mix of updates from friends and public figures, publishers, businesses and community organizations you are connected to. This balance is different for everyone depending on what people are most interested in learning about every day. As more people and pages are sharing more content, we need to keep improving News Feed to get this balance right.
Facebook are putting their users priorities first in making sure the news feed is interesting and relevant, which the company believes will entice visitors to spend longer on the site and make advertising more attractive.
If it works then it’s a win for Facebook, their users and those who pay to advertise on the site. Again though, the losers are the companies and brands not advertising who thought they could get views by the quality of their content.
Unless the content is very good, those companies not paying Facebook are in for more disappointment as their reach collapses even further than its current pathetic rates.
Google’s change too is something that puts users first; rather than dumping mobile web surfers onto an unreadable page, they are making sure people get to sites that are useful.
In many ways Google is only encouraging what has been best practice for at least five years, that every site should work equally well on mobile devices as they do on desktop computers.
What Facebook and Google are showing us is the value of putting users’ needs first. If your guests are happy then your business model has a much better chance of succeeding, regardless of who the eventual customer is.
Making business more user friendly should be a priority for all companies in a competitive world.
It’s interesting look at the fates of the three different concepts over the past few years; mobile has boomed and redefined computing and social has become big business with Facebook growing into a hundred billion dollar company.
Local though has struggled with Google, Facebook and a host of smaller and newer startups struggling while the Yellow Pages franchise dies. Despite the power of maps and geolocation, local just isn’t doing as well as the other two.
This could be down to the difficulty in harvesting the massive amounts of disparate data available to any service trying to draw an accurate picture of what’s in the neighbourhood.
Google Places tried to standardise that information for local businesses but the complexity of the service and its opaque, arbitrary rules meant adoption has been slow and merchants are reluctant to update details in case they fall foul of the rules.
Local services’ failure to take off has also had a consequence for the media as its in hyperlocal services that publishers have possibly their best opportunity to rebuild their fortunes.
That failure to properly harness mobile has also hurt merchants as many local operations are struggling to find useful places to advertise given Google Adwords and Facebook can be extremely expensive places to advertise.
So the mobile space is still ripe for a smart entrepreneur – a new Google or Facebook – to dominate.
Bigger smartphones are redefining media consumption, how does Google and traditional media companies respond to this?
Last week Google and Facebook announced their quarterly results with the search engine giant continuing its worrying slowing of advertising revenue. The respective changes of the two online services show how online advertising is changing.
While Google slows, Facebook is showing accelerating growth for its advertising, driven mainly by mobile users, illustrating the shift in internet usage from desktops to smartphones.
In its 2014 New Digital Consumer report, market research company Nielsen observed that US consumers in 2013 were spending more time accessing the internet on their smartphones than on personal computers; PC use had fallen seven percent to 27 hours a week while mobile use had surged 40% in 2013 to 34 hours.
Television still remained dominant with the combination of live and time shifted TV viewing making up 144 hours of the average American’s week, although it did fall slightly.
Those figures are a year out of date and there’s no doubt the numbers have accelerated since then. One of Tim Cook’s triumphs at Apple has been the release of the iPhone 6 and the larger form factors in the current generation of smartphones is a response to consumers’ demand to watch video on their devices.
Bigger Android, Windows and Apple smartphones will only seen even more people using their mobiles to watch video and surf the web.
Which puts Google’s predicament in sharp focus; we are definitely in the post-PC world yet their revenue still overwhelmingly comes in from desktop users while Facebook’s is increasingly coming from mobile consumers.
A strength Google has is that its revenues still dwarf the social media upstart’s – Google’s income is currently six times greater and its gross profit margin doubles that of Facebook’s – giving it plenty of leeway to change.
The question is where do the new revenues come from? Probably the biggest opportunity Google missed was in replacing the Yellow Pages franchises with their own local small business listings with Google Your Business (aka Google Place and Google Plus for Business) being lost in a confused and bureaucratic corporate strategy.
Compounding the problem for Google in the small business space is Apple’s entry and while Apple Maps is no contender against Google’s far superior product, an integration with Apple Pay would give Apple far more rich data to enhance listings with – not to mention more of an incentive for merchants to sign up.
With the changing web, Google are going to have to change as well. If advertising is going to remain the mainstay of their business then the company needs to find a way to capture smartphone users.
It could be worse however, a report from consulting firm Strategy Analytics estimates print media’s share of advertising revenue fell another seven percent this year. Time is running out for newspapers.
While print is ailing, the advertising battleground is mobile digital although TV still dwarfs the market. How this evolves in the next five years will define the next generation of media tycoons.
Google’s key revenue source is slowing, where do they go next to avoid falling into Microsoft’s trap?
The one factor that saw Microsoft become the biggest computer software company was the rise of the personal computer, similarly the decline of the PC has seen Microsoft stagnate.
One of the companies that benefited from the forces that pushed Microsoft into stagnation was Google and now it appears they could be suffering the same fate.
Yesterday Google released their quarterly results which showed the rate of growth in online advertising is slowing, which is a worry for the company as internet marketing accounts for 90% of the firm’s income.
Like Microsoft, Google has to diversify. Whether it’s the internet of things, smartphones, apps, driverless cars or something else remains to be seen but the pressure is building. Should the shift to mobile or other advertising mediums accelerate, Google could be looking at a declining market and the same problems as Microsoft.
Facebook’s local service is, on first look, quite impressive with it pulling together various features and data sources to give a quick guide to what’s on and what’s attractive in a city based on a user’s history.
In that respect it’s a clear threat to Yelp!, Tripadvisor and Google; particularly given the convenience of using a single app and getting recommendations based on the service most people spend the bulk of their online time upon.
At this stage it doesn’t appear the service is doing too much with the local business feature but it’s only a matter of time before those details start being fed into the algorithm as well.
Once again it shows why listings are important for local businesses. It may also be that Facebook is cracking the largely untapped local business market.
Social media’s desperate struggle to revive the dying business model of print advertising.
The story of Whisper and the betrayal of its users continues to roll on, but the real problem is the way social media services are desperately trying to recreate the dead business model of print advertising.
Whisper’s problems with The Guardian continue as the company tries to salvage its reputation but the irony for the service is that it was trying to shoehorn its business to fit the print publishing model that the internet started to erode twenty years ago.
It’s not just Whisper; almost every social media business from Facebook to Twitter wants to be an advertiser funded publishing company, just like the newspapers of thirty years ago.
Every social media service has some sort of angle that harks back to the golden age of newspaper publishing where print advertising was a deep river of gold. Most of them want to become publishers themselves.
It would be hard to think of a service less suited to being a media company than Whisper; but then there’s Yelp whose main business of reviewing eating houses and bars seems to be totally at odds with newspapers of yore.
On the Salesforce PayPal Media panel last week, Yelp! Founder Jeremy Stoppelman was asked if he saw the restaurant review site as being a media company, his response was “sure, it’s a blogging platform.”
So we have new media aping the old media business models where these platforms try to lock users into information silos; in the same way that a London Times reader would never buy the Sun.
The problem with that is the internet broke down the geographic barriers and today a Sun reader in London can just easily find celebrity gossip on TMZ and the broadsheet reader might find more thoughtful analysis in the New York Times.
Certainly someone browsing the web for restaurant reviews might find a better site than Yelp while a bride researching wedding dresses could just as easily find ideas on Facebook as much as Pinterest.
In reality, social media sites have nothing of the stickiness of the old fashioned newspapers in the days before the internet.
Of the social media services it might be that Facebook is the best placed to succeed as an old media publishing service with its advertising smarts pushing messages to its diverse and deep user base but that isn’t certain given the widespread user dissatisfaction with its news feed.
For the social media services much of the problem – -particularly for Facebook – lies in their contradictory aims; they are trying to be identity services, buying platforms, publishing services and advertisers.
For publishers that balance between content and advertising was always a delicate one; and one that shifted over time. For online services that balance is far more complex and the future far less certain.
One thing that is clear Is those contradictory aims aren’t going to be easy to reconcile and the quandary may prove to be insurmountable.
The rapid rise of upstart social media service Ello is a warning to the industry’s incumbents and the marketers using the platforms
Over the last week new social media service Ello has been in the news as the ‘anti-Facebook’ that doesn’t collect user details or push advertising onto feeds.
Certainly Ello has touched the zeitgeist with reports claiming the service is getting 30,000 new signups every hour. It’s clear social media users aren’t happy with the existing services.
Part of this discontent is due to social media’s growing pains as the platforms search for the business models to justify their massive valuations, with the consequence of users finding their streams being polluted with invasive and often irrelevant advertisements.
Social dilemmas
For Facebook in particular this is a problem as they have to balance the service’s relevance to users against the demands of ever desperate advertisers who want to post as many ads as possible into the feeds.
Adding to the discontent is suspicions on how the existing social media services intend to trade users’ information. While many internet mavens may claim ‘privacy is dead’, most people are concerned at how a history of their likes, friends or conversations could hurt future relationships or job prospects.
Every post you share, every friend you make, and every link you follow is tracked, recorded, and converted into data. Advertisers buy your data so they can show you more ads. You are the product that’s bought and sold.
We believe there is a better way. We believe in audacity. We believe in beauty, simplicity, and transparency. We believe that the people who make things and the people who use them should be in partnership.
We believe a social network can be a tool for empowerment. Not a tool to deceive, coerce, and manipulate — but a place to connect, create, and celebrate life.
You are not a product.
While Ello’s founders are right that Facebook, and to a lesser degree, Twitter are advertising platforms at present it may well be that social media’s days as a marketing tool are numbered as the business models mature.
The evolving social media model
Facebook’s announcement that it is going into the payments field is an indication that the businesses are maturing beyond the broadcast advertising model that worked so well for television and radio while Twitter’s struggles to shoehorn the old marketing tools into its business continue.
The most successful social media platform to date is LinkedIn which makes less than a quarter of its revenues from advertising — down from 30% two years ago — with the company building revenues in its corporate talent finding services, something that makes LinkedIn’s ambitions to be a global content publisher somewhat strange.
So it may well be that Ello aims to solve a problem that may not exist in the near future.
Ello could turn out to be the ‘Facebook killer’ however the odds are stacked against it, what is clear though is the social media marketplace is telling the industry’s leaders that consumers aren’t happy. It’s something the marketers staking their future on social media need to keep in mind.
