Finally, more ads in online programming

wsj

http://online.wsj.com/article/SB124770791413149107.html

Finally, a full slate of commercials in online shows.  This is where we’re headed.  People will moan and groan.  Purists will damn the defiling of their online sanctuary.  But, c’mon, why should we get to watch commercial-free (or -light) programming online?  The delivery mechanism doesn’t change the basic content, so why should the price (paid with my attention to advertising) go down by a quarter, or half, or all the way to free?

Think about this way:  The folks at Pfizer spend billions failing to cure illnesses, and billions more getting it right.  I want the medicine, I pay for it.  I don’t get a 75% discount to take the medicine from a spoon instead of a pill.

The delivery mechanism isn’t the issue.   It’s about all the money spent to develop something that works.

The folks at CBS wasted tons of dough making a bunch of lousy programs, but they also produced Two and a Half Men.  I want the content, I pay for it.

Again, the delivery mechanism isn’t the issue.  It’s about all the money spent to develop something that works.

If we could get medicine for free there wouldn’t be any medicine because nobody could afford to invent, produce and distribute it.

Same thing for content.  “We spend billions of dollars buying and making these programs. And if we give this stuff to consumers for free with limited ads, it’ll go away,” says Andy Heller, vice chairman of Time Warner’s Turner Broadcasting, in this WSJ article.

Over time, I believe we’ll pay for content in ways that differ from just watching 30-second spots.  We’ll get more involved with the advertising, because on the internet we can get more involved.  Maybe we’ll get more involved with fewer, more meaningful (relevant to our own needs and interests) brands.  But one way or the other, we’re going to pay for good content.  As well we should.

Banners are a Bargain

Only billboards are cheaper than banners on a CPM basis, as eMarketer CEO Geoff Ramsey reports in his recent (and very worthwhile) report on the state of online brand measurement (think:  mess).  At a $2.46 CPM, here’s how banners compare:

cpms

The full report is here:  http://www.emarketer.com/brandmeasurement/

It’s easy to trash banners.  I do it.  They’re so easy to avoid.  Kind of like…bus shelters and billboards.  But wait, I like Outdoor advertising.  I can’t actually TiVo myself down the street, yet.  So I actually see billboards.  Briefly, true.  Maybe a few seconds.  Enough for a headline, maybe a picture, a logo and NO MORE THAN SEVEN WORDS, as I recall from our former head of Outdoor planning.  And when I see a really good billboard, wow.  It doesn’t happen much.  It’s so hard to be great in seven words.  So, yeah, Outdoor can become a tonnage play.  Lots of chicken sandwich close-ups with a set of Golden Arches.  OK.  Registered.  (Also registered:  McDonald’s share rose to 46.8% from 43.6% between ’03 and ’08 while BK’s share fell to 14.2% from 15.6% over same time frame).

At two-forty-six a thousand (and declining?), it strikes me that banners are a good buy right now — if you’re willing to consider them as website billboards.  McD’s doesn’t expect me to drive by their new chicken sandwich billboard and DO anything right then and there.  No phone call.  No skipping the airport for a #7 to go.  No checking out their WAP site.  Nope.  They just want to show me they’ve got what they think is a great chicken sandwich.  It probably goes deeper than that back at HQ, but maybe not.  The point is:  the folks at McD’s know what they’re doing.  They don’t think outdoor is a good idea.  They know it is.  Lots of marketers know this.

At these prices, why not look at banners the same way?

Personally, I think relegating a digital experience (like banners) to something as static as a billboard is pitiful.  What a compromise.  But once you start EXPECTING people to engage with the ad unit, you start to measure it differently (ahhh, the click-through-rate).  And then banners really look bad.  (Why don’t people engage with banners?  Because they don’t want to and don’t have to.  This will change.)

So, at a $2.46 CPM, I’m surprised more marketers aren’t saying to themselves, hey, I don’t care if people click on this or not — I just want to let them know we’ve got a great new chicken sandwich.  Or whatever.  As long as they can say it in seven words or less.

Don’t confuse audience with customer when talking “free”

cuban

http://blogmaverick.com/2009/07/05/the-freemium-company-lifecycle-challenge/

Hmmm.  I want to agree wholeheartedly with this post from Mark Cuban on his blog yesterday but can’t go all the way there.  I do agree that “free” is an unsustainable business model.   Who wouldn’t?  And I, too, believe free-flowing investments have created a certain addiction to hope:  get eyeballs first and then hope to make money.  But dooming Google to failure because they’re based on “free” contradicts an important fact:  $21.8 billion in revenue and $4.2 billion in net income for the full year 2008.  97% of Google’s ’08 revenue came from advertisers.

In other words, people PAID Google $21 billion for the privilege of posting ads next to search results and other content.  Google didn’t give away those placements for free.  Rather, they converted a free offering (search) into a profitable revenue stream (advertising).  This is not a new idea.  TV networks converted a free offering (TV shows) into profitable revenue streams (advertising), too.

What we’re really talking about here is an indirect payment cycle.  A bunker shot, if you will.   Instead of paying the content provider (including Google) directly for what they provide (search, programming, etc.), you and I pay advertisers for their stuff (having been exposed to their ads).  The advertisers, in turn, pay the content provider for the chance to advertise to us so we’ll buy more of their stuff.  And so on and so on.

Google isn’t working for free.  They make a valuable product and exchange the people who consume it (you and me) for cash from advertisers.  Were they unable to get the cash from advertisers (or elsewhere, like directly from people who search the internet), then, yes, I’d lump them in with the many companies whose start-up money runs out before real money appears.

It’s the difference between audience and customer.  Audiences may or may not pay.  Customers always do.  Google has customers.  Lots of them.  And those customers don’t get you and me for free.

Facebook has an audience.  We’ll see if it gets customers.

(Here’s a link to the full post on Mr. Cuban’s blog:  http://blogmaverick.com/2009/07/05/the-freemium-company-lifecycle-challenge/)

Bigger banners are inevitable

techcrunch070109 Once you’ve had something for free it sucks to pay for it.  Oh well.  Most people would prefer advertising not intrude on our browsing experience.  I understand.  I wish American Express would stop intruding on my dining experiences.  We’re going to pay for valuable online content somehow, like with our attention to advertising (umm, not a new model).  There is no such thing as a free lunch.  Advertising will become more intrusive over time. It will also become more relevant and more (oh God I’m going to say it) engaging.  Remember when people found it unseemly to send unsolicited email?  Yeah, we got over that…

http://www.techcrunch.com/2009/07/01/big-websites-start-running-bigger-display-ads-big-mistake/