Web 25: Open Borders and Walled Gardens.

Late October will mark the 25th anniversary of advertising on the Web. Having been part of the team that ushered in those first primitive digital ads in 1994, I’ll be using this space in the intervening weeks to explore the fulfillment, failure and future of the web’s marketing and social promise.  This week, the open web and the walled gardens.

That the Web would ever be a thing with regard to advertising was never a foregone conclusion.  At the time Wired Ventures launched the Hotwired site and its dozen hard-coded advertising sponsors in 1994, prevailing wisdom said it was a fool’s errand: the real money would bypass the edgy and dangerous web in favor of the existing dial-up BBS (Bulletin Board System) offerings from America Online, CompuServe, Prodigy and the first generation Microsoft Network.

This week’s Drift is proudly underwritten by Permutive, the data management platform built for publishers. Permutive enables you to increase your data-driven advertising revenue, whilst keeping user privacy at the heart of its technology. Permutive’s customers include BuzzFeed, Business Insider and MailOnline. Learn more here.

With the web now on everyone’s phone and digital advertising at more than $100 billion, the sentiment of mid-90s Madison Avenue seems quaint today.  But it was in fact based on solid logic.  Back then – when the web was nascent and browsing technology mostly experimental – getting a customer online and giving them any kind of consumer experience was a serious moat.  AOL’s discs and Microsoft’s bundling of web connection into its technology seemed like an insurmountable advantage – a wall most publishers and advertisers couldn’t imagine breaching.

Look at us now.

Twenty-five years later digital advertising again lives in a world dominated by a handful of walled garden experiences – Google/YouTube, Facebook and the rapidly advancing Amazon.  At this point we all know the stats about the consolidation of new revenue flowing to these three.  But now the moat that protects their advantage is not about access and consumer experience:  it’s now based on instant recognition of the consumer (and application of their data) and being one of the first mobile apps touched each day.  And while these are formidable advantages and consolidation is a natural and predictable state of affairs, hegemony and permanent domination are just a narrative.

As my wife Sharon and I often say to each other, two things can be true at once.

Most of the money and consumer time can go to the big three and there can be plenty of room and resources for open-web publishers and players to innovate and grow healthy businesses.  A handful of massive players can brilliantly anticipate consumer demand and social acceptance and also subsequently overplay their hands, reach a tipping point with consumer privacy and lose the confidence of advertisers.  The consumer’s digital and commercial life can seem fully tilted toward a triopoly of players and a thousand flowers can bloom.

Now, as then, publishers, advertisers and consumers will exercise choice.  Now, as then, great companies will evolve to meet the challenge while yet more will start to take shape.  Now, as then, nobody is guaranteed survival or a share of growth.  Now, as then, the survivors and winners will not wait passively for government intervention or a shareholder awakening. They will focus intently on what’s missing for the consumer and what’s not square for the advertiser.  Recognizing that incrementalism is the enemy, they will take big swings.   And they will build their companies and conduct business as though they’ll last 50 years.

They will do as they should, not just as they may.

Frenemies: A Review.

It’s not often that I’ve used this space to review or comment on business books.  But the blend of industry perspective and salacious beach reading found in Ken Auletta’s Frenemies: The Epic Disruption of the Ad Business (and Everything Else) is irresistible.

Auletta, longtime communication columnist for The New Yorker and author of Three Blind Mice and The Highwaymen, attempts to frame the collapse of the modern advertising business over the past two decades of technological displacement, radical shifts in media consumption and the shape-shifting and land-grabbing by technology platforms, consulting firms and media owners – the aforementioned Frenemies.

I say he attempts it because Frenemies is ambitious but flawed.  It’s also absolutely indispensable.

This week’s Drift is proudly underwritten by Voicera. Are your teams 100% focused?  Do you wish your teams had a 100% accurate Salesforce?  Sign up for Voicera and give them EVA; the Enterprise Voice AI.  Eva listens, takes notes and automatically updates Salesforce!  Act now and get special discounted pricing as a reader of The Drift.  Visit www.voicera.com/upstreamgroup.

What makes the book so readable is also what limits its perspective.  Auletta anchors his narrative on a handful of big personalities – then-WPP head Martin Sorrell; GroupM architect Irwin Gotlieb; R/GA founder Bob Greenberg; Facebook sales chief Carolyn Everson; and most heavily — and controversially – on MediaLink CEO Michael Kassan. (Full disclosure: My company Upstream Group has featured MediaLink executives at our events, and I have spoken at a MediaLink internal meeting.)  Reviewers have called Frenemies “DOA:  Dated on Arrival” because Sorrell was pushed out at WPP prior to publication.  But to me a bigger issue is that Auletta relies on the Great Men school of history; in a search for the modern-day heirs to Burnett, Bernbach and Lois, he tells his story through mostly older white men (Full disclosure: I am one.)  Everson, in her mid-40s with two decades of business experience as the book was written, is too often described as mentee and protégé.  While the featured subjects are noteworthy, none seem to really fill the shoes.  Or perhaps that’s just the point: advertising companies no longer have people’s names on the door.

What the book does extremely well – and what makes it required reading for younger executives in our industry – is to conjure up the disarray and displacement of today’s advertising establishment.  You get a clear picture of the absolute free-fall that holding companies and agencies are experiencing.  It’s a story of recrimination, confusion and customer abandonment that many in the industry have failed to see fully even as they’ve lived through it.  Like the proverbial frog in the pot, they’ve not fully felt the heat as it’s gradually increased.

This displacement and disarray prepares the ground for Kassan, who with no small amount of help from President and COO Wenda Harris Millard, has made MediaLink the glue in the fractured, fragmented world of media, marketing and communication.  Kassan gets far more ink in Frenemies than any of the other protagonists, and in its pages – as in the industry – we find MediaLink at the center of every meeting and the heart of every deal.  If Frenemies comes across as Kassan’s biography, it’s not an uncritical one:  Auletta presents him as a mashup of Chicago’s Billy Flynn and Tom Hagen from The Godfather.  But perhaps the prominence of a character like Kassan  – a fixer in a broken world – speaks volumes about the state of advertising today.

Perhaps that’s the point.


The Right to Target.

Look hard at the title of this post.  If you sit with it for just a few beats you may see irony, a contradiction in terms … or you may not see much of anything.  But our interpretation of this simple phrase – The Right to Target – says a lot about each of us and when we probably got involved in this whole digital marketing thing.

To those who came to the business between 2000 and 2010, there may seem little to discuss.  Of course there’s an inherent right to target advertising to users… they’re getting their content for free, right?  Indeed, in the first decade of the millennium the machinery of targeting and its rationalization were both cranking full force.  Technologies were invented and businesses were launched to do nothing else.

To those who came earlier – and probably to those just joining the party now – the irony and inherent conflict in the term seems rather obvious.  To target someone seems like an overtly aggressive and invasive act.  Seen in a vacuum, the verb alone is rather jarring.  How could anyone have a right to target someone else?  It’s a question I raised way back in 2010 (@ 18:45 of the video) just as programmatic buying and technology were crashing over the business like a tsunami.   Back when it was raining money, this question may have seemed quaint or naïve.

Doesn’t seem like that anymore, does it?

This week’s Drift is proudly underwritten by Salesforce DMP. Salesforce DMP allows you to capture, unify, and activate your data to strengthen consumer relationships across every touchpoint. Find out more here.

The Cambridge Analytica scandal the onset of GDPR regulation may not be causing a sea change in attitude and practice, but they are vividly reflecting it.  Zuck’s well-rehearsed damage control exercise on Capitol Hill brought the issues of targeting and data control out of the server closet and into mainstream consciousness.  I don’t think this dies down now, do you?

So if targeting is no longer a right, then what is it?   It’s a privilege.  It’s a pact.  It’s a knowing transaction executed in simple terms that have nothing to do with the insane legalese of the user agreement.  It’s not even targeting anymore; it’s customization and content selection.  And there is going to be very little in the way of gray area.  There will be great companies who uphold the highest standards and there will be scoundrels.

Semantics?  No.  Brands both established and emerging have woken to the social and business cost of being on the wrong side of history.  They’re in the room now with their eyes wide open.

The change has come.  Welcome to the sunlight.

Open. Close. Repeat.

Open Close RepeatI’m writing today’s post from Row 2 at the LUMA Digital Media Summit in New York. For those unfamiliar, LUMA is the investment banking firm that produces the “LUMAscape” charts that aim to make sense of the confusing nature ad technology and distribution (and has run many of the significant M&A deals in our world.) The first topic called out for the day by CEO/emcee Terry Kawaja was “The Digital Duopoly: Open vs. Closed.” There are lots of implications here for anyone selling ad services, technology, data or services in digital marketing.

The details are horrendously complicated, but the core concept is surprisingly simple: Will the data-driven, multi-touch marketing funnel be an open ecosystem or will it be controlled by a couple of parties – Facebook and Google – who are constructing closed technology and service stacks? Will marketing look like the Euro-zone or will it be dominated by a couple of large, highly controlled economies?

The Drift is proudly underwritten this week by comScore. Are you getting skewed? If you aren’t taking NHT out of your measurement – including viewability and in-target numbers – you may be. comScore can help you keep it real. Learn more about the difference that sophisticated NHT, audience and viewability measurement can make to your bottom line: www.comscore.com/Why-NHT-Matters

Tim Armstrong appeared this morning via video hook-up talking about how the AOL/Verizon deal was about creating the world’s largest open platform, while Brian O’Kelley of AppNexus claims that AppNexus will be the wide open platform that allows all the players to play well together. Dave Jakubowski, head of ad tech at Facebook, gamely assured the audience that Facebook was all about giving publishers choices about how to monetize their content. Ay yi yi!

This may seem like one of those “Clash of the Titans” moments when we little people accept that we have no control. . I make no moral or value judgments about open and closed, but every day there are lots of little decisions that get made every day that matter a lot. Do we use Facebook, YouTube or neither for distribution and monetization of our video assets? Do we double down on DoubleClick, Atlas or neither as our display serving solution?   What active decisions do we make about who gets access to our first party data and what business rules do we put in place to govern those relationships.

Since the days of Netscape vs. Microsoft, we’ve been predicting that two big players would ultimately own everything. Today those players look like Facebook and Google. But we’ve also seen a continuous cycle of consolidation leading into the next cycle of openness and on and on. Open. Close. Repeat.

I always like to say that great companies all have one thing in common. They make active choices. And you and your company have active choices to make in the weeks and months ahead. Open? Closed? Good luck with that.

Six Questions for Louis Rossetto, Father of Web Advertising

Louis Rossetto FinalYesterday, 10/27/14, marked exactly 20 years since Louis Rossetto and Wired Ventures launched the HotWired site, and with it created the first ads on the World Wide Web. I was honored to have been part of that organization and just last week caught up with Louis to hear his thoughts on that time and on what’s happened in the 20 intervening years.

1. Hot Wired launched exactly 20 years ago, giving birth to online advertising.  Did you ever think its offspring would be so numerous and prosperous?

When we were all standing around Brian Behlendorf’s screen and he threw the switch, I was just hoping the server wouldn’t crash when it got its first hit. No, actually, we believed that this was the future of media, and it would eclipse and subsume everything else we were doing. And all is proceeding according to plan.

2. You are first and foremost an editor and journalist.  What do you think of the writing and curation on the web today?

Actually, I’m first and foremost a troublemaker, which anyone who ever worked with me would attest to. But the web today — it’s like asking what do I think about the writing and curation of evolution. Because it’s the ecology itself that’s amazing. No one is writing or curating it, it is writing and curating itself. More and more, it’s becoming a quicksilver representation of the workings of the human brain — which is itself a manifestation of billions of years of evolution.

This week’s Drift is proudly underwritten by comScore. For media sellers, comScore helps demonstrate the quality of their inventory in traditional and programmatic environments as well as provide tools for internal pricing and packaging. VIDEO and display environments benefit from detailed information about demographics, viewability and non-human traffic.

3. What companies do you feel are really pushing the consumers web experience forward?

Facebook, Twitter, Google, Airbnb, Kickstarter, WordPress, Pinterest, Flckr, Youtube, Spotify, Amazon, Nest, Gilt, Tripit, Wikipedia, Drudge, and Stumble Upon — sorry the list is pretty dull, but the biggest sites are driving experience, maybe because they are delivering most of it.

4. Wired was very much about privacy and the individual.  Big data is very much a part of all of this right now.  Thoughts?

I hate the fact that all of our life is ending up in databases we have no control over. Especially government databases. Non-government databases I am frankly less scared of. Government databases and intrusion, I guess you could try to curtail, either actively by making your life more opaque to them using technology, or trying to get laws passed — but we already have laws and fat lot of good it does. Profusion of private databases and big data analysis, on the other hand, is pretty much uncontrollable, I figure. In a village, there are no secrets, everyone knows everyone’s business. Well, today we live in the Global Village.

5. Wired used to list Marshall McLuhan on its masthead as “Patron Saint.”  Any new Patron Saints emerging today?

There are a lot of false prophets out there, so I’m not taking that bait. Who said “It would appear that instead of the advertising promoting the product, the product promotes the advertising. But that is not exactly right. Actually, the product promotes the consumer?”  Marshall McLuhan said it in 1995. But wait, Marshall died in 1980. This was Gary Wolf channeling Marshall in an email “interview” we published when I was editing Wired. Who needs another patron saint when you can just channel the original?

6. Give us one word or phrase to describe web advertising these last 20 years and another to describe what it might be in the next 20?

The web marked the “future” — you know, the one model we have in our head, that clean break from the past that will arrive someday, but we can’t say how, we can’t say when, and we can’t say what it will be. We just know it will be so “different” it won’t in any way be like the present.  The past 20 years after HotWired have been “prelude.” And the next 20 will be “prelude.” And then we will again be in the “future” that marks a clean break with life as we know it. (Although we may be there already).

To learn the full story of the birth of our medium, here are links to an article from Fast Company and an incredible podcast from the Internet History Project.