Online Advertising

The First Week of the Next 25 Years.

As we began the second quarter-century of digital marketing on Monday, I’m choosing to republish an essay I was invited to write for the University of Florida’s “Captivate” program 5 years ago. Only the date context has been edited. It’s a longer read than you are used to in The Drift, but I hope you’ll feel it’s worth it.

It’s an interesting wrinkle in time for the colliding worlds of advertising and digital empowerment.

Exactly 25 years ago I was part of the team that sold the very first banner ads on the World Wide Web. On 10/27/94, Wired Magazine flipped the switch that lit up HotWired, the “cyberstation” that ushered brands like IBM, Volvo, MCI, Club Med and – famously – AT&T into the digital age. From the humble origin of a dozen brands paying $15,000 per month for static banner placement with zero analytics, web advertising is closing in on $50 billion in annual spending.

At precisely the same moment, the banner ad (and related forms like the 15-second video pre-roll and the mobile display ad) has become a social touchstone that evokes a firestorm of condescension and condemnation at every turn. Indeed, the 20th anniversary of web advertising has mobilized the kill-the-banner crowd like so many pitchfork-wielding peasants out to stop Dr. Frankenstein. To the casual observer this all may seem a bit schizophrenic: Can the digital ad business really have been built and sustained on top of such a flawed delivery vehicle? And if web advertising techniques are really so ham-handed, why are they now being co-opted by the behemoth of television in the forms of screen overlays, dynamic ad serving and programmatic distribution?

Interesting questions indeed. But they are also the wrong questions.

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Over my 22 very active years serving media companies other digital and traditional advertising players, I’ve had a front row seat for a show that is consistently mistranslated, misdiagnosed and misunderstood. Digital advertising was born to an internet that people read and watched. During that seminal period of tiny gif images and narrow, scrolling columns of type we started calling those who put content on the web “publishers” – a role that was even then retiring to a world of hagiographic nostalgia. And advertising – well, that was a science to be grafted onto the web from other forms of publishing and broadcasting as technology and bandwidth allowed. Those first crude banners were nothing more than outdoor ads writ small. That they gave way eventually to larger, more picturesque ‘magazine’ ads and then to TV-style video spots meant more and more growth, but it also continued to miss the larger point that defines the true value of digitization – and lights our path for what happens now.

Let’s be honest in admitting that we haven’t really been all that much of a literary culture for much of the last 50 years and the internet doesn’t change that. You’re now just over 400 words into this essay: statistically, it’s already one of the longest things most American’s will read on the internet today. Over these two decades, the web has become something everyone does – not something they watch or read. We look for answers, we pass jokes back and forth to one another, we settle arguments. We preen and strut, we compare and buy, we “snack” on short bits of video. We organize things, we plan projects, we opine. Does this mean that content no longer matters? Or that it matters more than ever? The maddeningly simple answer is that it matters when it matters; when it’s closely aligned with the experience the consumer is living at that moment in time. And not for its own sake.

This leads me to the crossroads confronting those who aim to create the next $50 billion of revenue through “digital advertising” and for the advertising industry as a whole. The rocket ride from 1994 to 2014 has been driven by a combination of shifting consumer behavior (the increased time spent on browsers and devices is inescapable even to the staunchest traditional media die hard) and our ability to efficiently “tag along” with the experiences consumers are choosing to create for themselves digitally. Always on, always in our hands, the internet has become an extension of us as people. But advertising, mostly, has not kept up.

Two dominant trends in digital advertising today are data optimization and the programmatic trading of advertising display opportunities. In the first, we are overlaying information to identify and make decisions about those who we might show our ads to. In the second, we are building the technology and functionality to trade “ad futures” with one another. Both of these are critically important, “hard trends,” and they’ll continue – to some point – to usher more dollars into digital channels. But they are also both exercises in division and reduction: help me show my ad to fewer of the people who don’t matter; help me buy fewer of the ads that don’t work or don’t’ matter.

So what, then, will create the next great wave of growth for the advertising business? I believe it will happen only by confronting the truth that advertising in a digital world matters most when it least resembles advertising. Google and (to a lesser and less consistent degree) Facebook start the value creation at the point of consumer action and intent. The form that “advertising” takes is malleable and built into the experience: a helpful suggestion via some text as they answer my search query; a post from a marketer on a topic around which I’m already active. Buzzfeed has made a huge splash by helping marketers create just the kind of snackable content-McNuggets that we already like to trade with one another across the very platforms — Facebook, Twitter, Tumblr – where we already trade them.

But this is the tip of the iceberg. Many current techniques will look as archaic in 2024 as the earliest banners look today. But the companies and leaders who will endure and thrive are those who consistently answer a different set of questions:

What is the consumer doing today with digital tools and how can I help her do it better?

How might we create new value by blending discovery, commerce and productivity into a new experience shared by consumer and marketer?

If there were no such thing as an “advertising budget,” how would we create a connection between consumers and brands, companies and products that can bring new value into the consumer’s life?

These are the questions to be confronted not only by “digital advertising” leaders; after all, what advertising will not be digital by the time we reach our next ten year milestone? No, this is the existential moment for all of what used to be called Madison Avenue and “the Media.” Because when Wired flipped that switch 20 years ago they also set in motion a chain of events that prompts the re-imagination of all advertising.

From this point forward, don’t call any of it advertising. It will either be something much, much bigger – or it will be background noise.

The New Oreo, Part 2: The Integration Layer

Over the past two Drift posts, I’ve suggested that sales leaders need to think about their business on three levels in order to maximize revenue.  In this post, we explore ‘the Integration Layer,’ in which marketers want their brands and messages to truly become a part of your user experience.

First, let me say emphatically that this is not your father’s sponsorship business.  The ‘Integration Layer’ of your business involves deals and ideas that may take weeks or months to incubate and plan.  It necessitates going beyond the confines of ad inventory and into the realm of larger marketing goals.  It’s almost always client (not agency) facing.  And it involves a different breed of seller.  As you the sales leader considers how and how often you go to bat for these kinds of relationship deals, here are some rules of thumb to follow:

  1. Enterprise Sales call for Enterprise Sellers: Some team members will be good at pushing digital paper back and forth with agencies, optimizing buys and so forth.  They’re not your front line people on Integration Layer deals.  Consider sellers who can handle matrixed decision making, can stay with a deal for weeks or months, and can draw clarity from confusion.  Ex-enterprise software sellers, those who’ve sold events, or agency account people thrive in these roles.
  2. You’ll Always Know They’re Coming: Integration Layer deals don’t fall off the back of 48 hour RFPs.  You’ll want your hand-picked team of Enterprise Sellers sniffing these opportunities out months in advance.
  3. Build Collaboratively: This kind of deal is not a talent show or a beauty contest.  As talented as your marketing and creative people are, de-emphasize the pretty pictures and slick demos.  You’ll earn the deal through hours of hard work and whiteboarding in the clients office.
  4. Even When You Lose You Often Win: As I wrote recently in “The Downstream Effect,” you won’t get every integration deal you pursue, but the act intelligently pursuing them will feed the overall success of your business.

True integration of clients brands and ideas into your site experience takes time and effort.  It’s not a part time job for a full-time transactional seller.  Think hard about the staffing and execution you put around it.

Next Up:  The New Oreo, Part 3:  The Audience Layer

The New Oreo, Part 1: The Page Layer

In the last Drift, we laid out the three revenue ‘layers’ that today’s digital sales leader must tend to in order to maximize revenue.  In this post, we explore ‘the Page Layer,’ a revenue stream that’s at once familiar and increasingly complicated in today’s market.

Once upon a time, the digital sales VP’s job was pretty straightforward:  you had a sales team you directly controlled; those sales people would then sell as deeply as possible into the ‘inventory’ of ad banners and video on the websites that you also controlled;  and finally, you’d offload unsold ‘remnant’ inventory to a third party network.  Simple.

Today not so much.   With your sales people constantly torn between audience buys, contextual placement and deeply integrated sponsorships (and with agency buyers not always understanding exactly what they’re asking for)  it’s gotten complicated.

The first bit of advice I give clients is to go back to your roots.  Selling specific contextual placement and/or guaranteeing that a given ad will run on your domain on a given date is a unique capability and you must treat it as such.   Some rules to follow as you seek to get the most value and return from the “Page Layer” revenue stream:

  1. Constrict the Channel: With almost no exceptions, people who carry your business card should be the only ones who can sell specific placement on your sites.  You should be able to go into the marketplace with a straight face and say, “If you want to be sure you run on my site, or on that page, on Thursday you have to come through me.  Period.”
  2. Turn Down the Noise: While site design has improved somewhat, there’s still far too much supply out there and the average web page looks like a cross between a NASCAR fire suit and a minor league ballpark.  A site or page specific buy is about environment;  make that environment a clean, well-lit place by cutting the clutter and eliminating the throw-away ad units that are dragging your CPMs down.
  3. Never Sell it All: Letting a given customer buy you out of desirable inventory is bad practice.  You always want to have a little bit left on the shelf to offer to advertiser B.  At the same time you are going to make sure you…
  4. Always Blend: Your dedicated page sellers should be good negotiators, and one thing they should always negotiate is deal composition.  Blending page specific or site specific ad placement with run of site/run of network inventory takes nerve and professionalism.  But it can and must be done.

The ‘Page Layer’ is a rich but finite resource.  Too valuable to be thrown into the hash of an undifferentiated RFP process.

Next Up:  The New Oreo, Part 2: The Integration Layer

I Got My (Microsite) in a Box!

For the last three years I’ve been on a mission to bury the microsite.  The whole idea of building these little Potemkin marketing villages, bolting them onto our domains and then coaxing and cajoling consumers to visit them would be quaint if it weren’t so destructive.   For more than a decade I’ve watched as publishers have spent big money building custom microsites and then driven themselves to distraction supporting them with traffic. All this hand waving usually results in a one-time deal that frustrates everyone, burns through precious resources and leaves no footprints in the sands of brand building.  Enough!

In just about every workshop I conduct I urge — plead with! — sellers to end the madness.  “There’s no reason to do these anymore,” says I.  “Take the visual assets of your media brand, fold in some creative and product messaging from the sponsor, dump it all into a Flash ad unit and distribute it!”  The rollover ad unit can give the willing consumer virtually all the functionality that she’d find in a microsite.  And then you can bring the ads to the people instead of bringing the people to the ads.

I know:  We’ll call it “Microsite in a Box!”  Or….

PointRoll just announced the release of The  Dig@torial which “…allow(s) advertising content to live inside a banner directly adjacent to editorial content pulled from the publisher’s site. The effect is to bring the idea of a branded microsite directly to a publisher’s homepage.”

Uh, yeah.  What that guy said.

I’m not saying that the packaging and release of this or any single ad unit is a tipping point (25 cents to Malcolm Gladwell), but it’s darn helpful to see this idea popping up elsewhere.  What will really make a difference is what publishers and agencies do (and don’t do) now.

  1. Just say no to Microsites. Stop asking, stop offering.  There’s no right way to do the wrong thing.
  2. Start looking at the banner box as a co-distribution platform. “Let’s put a little bit of our environment alongside your brand message and take it for a spin.” And let’s not stop at our site’s borders, but rather…
  3. Let’s start using lookalikes and audience re-targeting (bad word;  need a new one) to extend our creative ideas onto the greater web.
  4. Sellers:  Be the broker. What if that creative idea you generate can sustain a number of different sponsors?   If you haven’t got a good working relationship with PointRoll, Eyewonder and other rich media providers, you need one.  And while you’re at it, get to know some smart creative people as well.   You’ll find yourself at the center of a network like this  sooner than you know.

Microsite in a Box.  Context-t0 -go.  Dig@torial.  Whatever you call it, it’s a tool every digital seller should have in his back pocket.

The Downstream Effect

Why go to the trouble and effort of bringing  your customers big, creative deals when the batting average for such deals hovers well below .100?  Why expend the creativity, vision and ambition to develop these “Black Swan” deals if the vast majority of your business will flow in through normal transactional channels?   To really understand the rationale, you need to factor in The Downstream Effect.

A senior industry executive reminded me of this during a workshop I conducted  last week.  To paraphrase:  Our company must have brought one customer at least 15 big, cross-media ideas over the course of two years.  We’d have great discussions but ultimately they didn’t buy a single one.  Yet, quietly, their spending with us grew 500% over those two years, all of it coming to us through normal channels.

So what’s going on here?  Is this business the company would have gotten anyway?  Was this all a lot of arm flapping?  Unlikely.  The sales organization that  consistently pushes smart ideas up to the customer is winning even when it doesn’t land the sexy ‘Black Swan’ deals.  It’s  getting regular access to primary upstream decision makers and self-branding along the way.  When well-executed, the process itself has value to the marketer.  They learn and grow along the way — they enjoy the process — and they subtly but measurably reward companies who make the effort.  Here’s a checklist to follow if you want to prepare your sales team to bring quality ideas to clients and enjoy the benefits of doing so:

Have a Point of View: Your team needs to have strategic yet dynamic POV on the customer’s marketing and competition, and your ideas should flow directly from it.  Every member of the team should be able to articulate it simply and clearly.   The client will know instinctively that you’re not just throwing stuff against the wall.

Build from Strength: The best ideas aren’t invented, they’re aggregated.  What you do for a client should be based on those things that your company does really well.  So what are your strengths?  What can you put on your “First/Best/Only” list?

Collaborate: Marketing ideation isn’t a talent show, yet too many organizations focus too much energy on preparing beautiful decks and demos instead of opening up the process to the customer.  Don’t stage a presentation; host a whiteboard session.  A client will always build something bigger with you than he’ll buy from you.

Strategy Doesn’t Travel North: If you’re trying to drive ideas up through planning teams or on the back of RFPs, you’re wasting your time.  You need to create an open channel to the marketer and to the strategic agency people they speak to every day.  And never ever throw your ideas over the wall via e-mail; if it’s worth consideration then it’s worth a face-to-face meeting or WebEx.

There’s no reason to choose between strategic, creative sales and your everyday transactional business.  You can have both, and thanks to the Downstream Effect, one will actually feed the other.