Future of Media Summit Blog

Reuters has just reported that the European Union’s advisory body on data protection intends to scrutinize targeted online advertising and its implications for privacy in 2008. The Facebook Beacon debacle this week has brought to public attention the ramifications of targeted advertising for privacy, and the EU is already taking this to heart.

The EU’s machinations are among the most powerful forces shaping global business, and in particular the online world. To take just a couple of examples, Microsoft has come afoul of the EU on monopoly abuse, and Google’s mooted acquisition of Double Click is being delayed until April while the EU extends its probe. On a far broader canvas, extremely strict EU data protection laws shape how online business is conducted all over the planet.

There is no question that targeted advertising is one of the most fundamental forces shaping the entire media landscape. The greatest power of digital media (which is evolving to eventually cover almost all media, including many forms of TV, much outdoor advertising, and will also encompass newspapers come the advent of e-paper) is that it allows advertising messages to be targeted to the individual. This is not just about showing advertisements to those who will find them relevant, but also about customizing advertising content so that it is more likely to influence the individual viewer.

The December/ January issue of Marketing magazine includes predictions for 2008 from an array of industry commentators, including myself.

One of the quotes they took from me was:

Social media shows no sign of slowing down any time soon, with more advertisers looking likely to jump on the Web 2.0 bandwagon in 2008. According to Dawson, a new trend could see a proliferation of smaller, more targeted social networking sites. “The social network landscape will be highly dynamic, and new specialist social networks are likely to do well,” he says. “Open, independent platforms for storing social network information will become a real force in how people use social networks.”

Dawson also forecasts a challenge for Second Life. “ A major competitor for Second Life will emerge, taking advantage of its technical problems.” He also suggest virtual worlds will be used more frequently in work settings.

Some of the other predictions for 2008 I made include:

“Inevitably the marketing industry will consolidate. In just the same way as happened in the accounting industry several years ago, consolidators will actively acquire smaller operators in an attempt to build large businesses. A few will succeed at this, and more will fail.”

Several media executives have asked me about the convergence of the Internet and TV over the last couple of months. I now have a nice reference point for them about the short-term obstacles and possible solutions, courtesy of Nick Wingfield in an article in the Wall Street Journal titled The Internet. The TV. They have even created a brief video – as below – to provide a quick overview of the topic.

Nick frames the issue as a series of problems with potential solutions:

THE PROBLEM: Too Many Boxes
THE SOLUTION: Blend Boxes

Reuters has just reported that the European Union’s advisory body on data protection intends to scrutinize targeted online advertising and its implications for privacy in 2008. The Facebook Beacon debacle this week has brought to public attention the ramifications of targeted advertising for privacy, and the EU is already taking this to heart.

The EU’s machinations are among the most powerful forces shaping global business, and in particular the online world. To take just a couple of examples, Microsoft has come afoul of the EU on monopoly abuse, and Google’s mooted acquisition of Double Click is being delayed until April while the EU extends its probe. On a far broader canvas, extremely strict EU data protection laws shape how online business is conducted all over the planet.

There is no question that targeted advertising is one of the most fundamental forces shaping the entire media landscape. The greatest power of digital media (which is evolving to eventually cover almost all media, including many forms of TV, much outdoor advertising, and will also encompass newspapers come the advent of e-paper) is that it allows advertising messages to be targeted to the individual. This is not just about showing advertisements to those who will find them relevant, but also about customizing advertising content so that it is more likely to influence the individual viewer.

An interesting article on Techcrunch says Digg refugees may be heading to Mixx. Mixx is one of literally hundreds of community-based collaborative filtering tools that is competing with Digg, yet it is getting significant traction.

It is particularly instructive to read what some of the “Digg refugees” are saying:

“I have already had quite a lot of success with getting my submissions voted on, this may be partly due to the fact that many of my digg friends have joined the site.” Dave Eaves

“Mixx has a much more positive audience than Digg. It always amazes me that even the most popular and highest quality articles can get so many negative and unnecessarily degrading comments on Digg. So far the users of Mixx have proven to be quite a bit more pleasant, something that I know will be welcomed by most users.” Vandelay Design

The context here is that while Digg gets millions of readers, the way stories get voted to the top is based on relatively small communities. As discussed in an article I wrote on the structure of social opinion, 30 people out of a million-odd are responsible for the original submission of 30% of the articles that hit the front page of Digg. The reason for their success is that their friends follow what each other Digg and vote on these stories, at which point the general mass of readers pick up on it. Someone who is prominent in the community is highly regarded, and can be an overt as well as a covert influencer. The community starts to become highly social, with personalities, exchanges, likes and dislikes.

I've been a good friend and frequent collaborator with Business Development Institute since just after if was formed back in 2001. Since then it has become one of the best-established as well as one of the most innovative and interesting events and business development companies in the US. While their base is predominantly in New York city, they are rapidly expanding into other markets.

While I have been organizing the Future of Media Summit for the last couple of years, Business Development Institute have organized a series of related events in this space, including Web Video Leadership Forum, PR Leadership Forum, Communications 2.0 - Future of PR, New Frontiers in Online Advertising, and Blogging goes Mainstream (which I spoke at).

They are now pulling together all these themes into a major one-day event called Convergence 2007: The Future of Advertising, Communications, & Media, in New York on December 3. The event is highly focused on case studies, with senior executives speaking from organizations such as McDonalds, Toyota, Casio, and Audi, and themes for the day including web video, ROI, and industry careers. The entire event will be webcast for free. I think this is something which should become standard in the industry, making the cost of attendance less for the pure content, and more for the connections and immersion.

Future Exploration Network is an event partner, which is unusual for us, but it shows we think it's going to be a great event. Hope you can make it!

With the New York Times recently dropping all charges for its online content and now Rupert Murdoch openly discussing making the Wall Street Journal Online free, it seems that the days are likely numbered for paid subscriptions to online newspapers.

It is also useful to remember that there are now 169 free daily print newspapers around the world with a total circulation of 27.9 million, according to the World Association of Newspapers. In Spain 51% of print newspaper circulation is free, and in Denmark it’s 32%. The trend to free print newspapers is strong, with new free newspapers springing up all over the globe after the business success evident across Europe.

The trend to free online newspapers has sparked a major debate on whether online content should be free. Most recently an article in the Wall Street Journal itself titled Murdoch’s Choice: Paid or Free for WSJ.com discusses the issue. It includes the following chart to illustrate its key point that growth in online advertising is far from matching print newspaper advertising revenues (see comments on the chart later in this post).

In the Future of Media Report 2007 we published some original research on the ownership of online classifieds in the US, UK, and Australia. One of the biggest industry fractures in the shift to digital media has been the emergence of online classifieds. Classifieds used to be the sole domain of print media. As classifieds have shifted to a medium that is superior in accessibility, searchability, and cost, new entrants have taken part of the pie. It has been possible for incumbent media to leverage their power and position to be successful in online classifieds, but in many cases other players have taken the opportunity and seized prominent positions.

As such we looked at the jobs and real estate online classifieds markets across the three countries, dividing the owners of properties into five groups: Traditional Media, Large New Media (e.g. Yahoo, eBay, Google), Small New Media, Industry (e.g. recruitment or real estate firms), and Other. We used traffic to the sites as a proxy for their prominence. We would also have liked to have compared online classifieds with print classifieds, but it is difficult without financial data. Perhaps a project for our 2008 Report... The analysis is below – click on the charts for full details in the Report.

A few months ago I wrote a piece about new business models for content, sparked by a fascinating dream I had. In the post I mused:

My dream sparked off many thoughts about content business models, including the evident one of replicating the model in the dream – getting people to pay to skip ads. If you extend this far enough, you get to a model where you can price advertising by how much people are prepared to pay to skip it. Consumers should be able choose how they pay for content – by payment or attention. Ultimately we should be able to move to dynamic content markets, where there is a different cost depending on whose attention you are capturing, and the context in which it is embedded. Perhaps people will pay a lot of money not to have an ad inserted in the middle of a chase scene in a movie, but they will even be prepared to pay to see the ads during the break in the Super Bowl.

Now the model of ads being presented as content is rapidly gaining prominence. People are not quite yet paying to watch the ads, but they’re certainly choosing to watch them. An article in the New York Times titled Now, the Clicking is to Watch the Ads, Not Skip Them and a piece in AdWeek called Ad Portals: Will Viewers Tune In? lay out some of the current and forthcoming offerings:

VeryFunnyAds.com, an online version of a TBS show, is predicted to have reached 75 million viewers in its first year. The ads are mainly 30 second TV commercials.

Honeyshed, from Publicis and Droga5, will be an online space dedicated to branded entertainment.

Didja.com (as in ‘didja like it?’) is due to be launched in early 2008 by NBC Universal will feature outstanding TV commercials, as well as other branded content.

AdPerk is an advertising network for opt-in viewers who choose to watch ads and branded network (this model pays people with magazines for watching content, but has a similar intent, says Gregg Hano, publisher of Popular Science, which has just launched AdPerk on its site, in a Beet.TV interview )

The naysayers of the dot-com era took particular delight in the demise of Henry Blodget, the Internet analyst at Merrill Lynch (where I used to work in the late 1980s) who was caught out promoting Internet stocks that he apparently privately thought were “a piece of junk” or “a dog”. As part of a subsequent settlement he is now not allowed to work in the securities industry. However Blodget continues to research the Internet industry on his blog Internet Outsider, where he has recently been writing provocatively titled posts such as Dead-tree media deathwatch: RIP Business 2.0, Running the Numbers: Why Newspapers are Screwed, and The Great Advertising Share Shift: Google Sucks Life Out of Old Media.

In this last post, Blodget analyzes the top 19 media companies (with supporting spreadsheets provided), indicating that advertising has shifted to online by 7% over the course of one year. The top-line figures are that US advertising at Google, Yahoo!, AOL, and Microsoft grew by $1.3 billion in the second quarter of 2007, while advertising at the 15 largest other media organizations fell by $280 million in the same period.

Or from another perspective, total advertising increased by 8% to $13.8 billion over the last year, with online increasing from $3 billion to $4.2 billion (23% to 30%), while offline advertising decreased from $9.9 billion to $9.6 billion (77% to 70%). Blodget comments: