Ear to the Track

My goals for the class are to acquire an understanding of:
• the principles classic economics theory
• how the dynamics of net-centric economics conform to and diverge from the principles of classic economics
• specific reasons, related to the above principles and dynamics, why various net-centric business models have succeeded or failed
• the strengths and weaknesses of networked production models

And:
• enhance my ability to evaluate the viability of net-centric ventures, especially the ones that pop into my head
• get over my proprietary resistance to the concept of user-generated content (specifically in advertising) and identify opportunities to harness it for the benefit of my clients and my business

My primary attraction to this class is that, among the varied the topics pertaining to digital media, economics is where the rubber meets the road. Digital media is upending many paradigms of communication, business, entertainment and social engagement, but the ultimate, even Darwinian, test of whether a new way of doing anything endures is how well it does in the marketplace.

And while I’ve seen the economics of the advertising/marketing communication profession change dramatically and impact my personal bottom line, my perspective has always been reactive. At best, I’ve stayed abreast of how digital properties and business models are succeeding or failing at monetization. And while I’ve observed and experienced the disruption and opportunity resulting from the new economic rules, I’ve not approached topics nor comprehended the forces in the context of classic economics. Monday’s class felt like a first step for me toward establishing that perspective.

Drew’s lesson on doing a critical review was very helpful, especially on defining what the review should accomplish. The advice to put on the reviewer’s hat from page one is a good discipline for me, especially with reads like “Long Tail” which are entertaining and thus make it easier to fool myself into thinking that it’ll be easy to go back later and take real notes.

I’ve been effectively cross-marketed into purchasing a subscription to Business Week magazine.  I subscribed to the magazine’s podcast several weeks ago and liked it — a “behind the cover story” concept in which the magazine’s editor discusses the weeks lead story with the author(s).  The latest cover story is entitled: “Beyond Blogs: What Business Needs to Know. “

The story’s authors, Stephen Baker and Heather Green, had written an article in 2005 entitled, “Blogs Will Change Your Business.”  Their key message in 2005 was: “Your customers and rivals are figuring blogs out.  Catch up or catch you later.”

In the recent podcast, Editor John Byrne, said that Business Week for the first time in its history decided to update an article.  The 3-year old “Blogs Will Change Your Business” was still one of the top hit-getters in the magazine’s online archive, but, as co-author Baker put it, a lot has happened in three years, including the success of YouTube, Twitter, Wikipedia, LinkedIn, Facebook and MySpace.  When the article was written, Friendster, was the closest thing to a hot social networking site. Tempus fugit, indeed.

He summed up the message of the updated article as “Social Media Will Change Your Business.”

I made a mental note to buy that issue of Business Week the next time I passed a newsstand. A few days after listening to the podcast, I received an old-fashioned subscription offer from the Business Week — not the first time — and it was a slam-dunk.  So, Business Week, if you’re wondering how to “monetize” your podcast, I am evidence that it sells subscriptions.

I have a client who’s warming up to the idea of doing a podcast and I referred him the CommonCraft tutorial. It answered the “What’s a Podcast?” question for my client far better than I had. I remembered Lee mentioning in his presentation that they use the “It’s kind of like this….” approach to explaining things — a technique that I favor in especially when selling he merits of technology products. I used it this morning in web copy about the music, video and photo capabilities of Windows Mobile phones: “It’s like having a media center in your pocket.”

I like what I call the “simile strategy” so much, I recently based an entire web video campaign for Safeco Insurance on it. The campaign is intended to give consumers useful nuggets of insurance knowledge without directly selling Safeco. It features brief monologues by four characters who each explain their topic by comparing it to something they’re very familiar with in their work.

Here’s one example:

This week, the broadcast TV networks pitched their upcoming schedules to advertisers in an annual television industry ritual known as “the upfronts.” Back in the what both sides now must think of as the Good Old Days of linear TV before TiVo and YouTube, the networks extolled the strengths, not just of individual shows, but of an entire evening’s prime-time lineup.

But according to an article in last Monday’s NY Times, the days of the “lineup” may be numbered. Recent Neilsen ratings report that prime-time viewership of the 4 broadcast networks is down by 6 million viewers compared to a year ago.

A major reason appears to be the increasing popularity of time-shifted consumption — one of the primary benefits of podcasting. Viewer are recording on DVRs, using cable on-demand services, purchasing TV episodes on iTunes and going to advertising- supported streaming sites such as Hulu and Fancast.

DRVs are the most popular time-shifting technology, with one in four households using them, a 10% increase in the past year. The DVR has forced the networks and Neilsen to revise the traditional ratings metrics to include shows watched within three days of being originally broadcast, which has boosted the ratings of some prime-time shows by as much as 25%

The articles quotes Alan Wutzel, the head of research for NBC as saying that “he DVR is both a friend and an enemy for the networks, “the classic frenemy.” The good news is that time-shifting is enabling viewers to watch more television because they can watch at their convenience. They bad news is that, on average, DVR viewers skip about half of the commercials that make those shows possible.

For advertisers, television continues to offer the greatest immediacy, persuasive impact and broadest potential audience. Measuring the effect and value of advertising has always been a black art (“I know that half of my advertising is working, I just don’t know which half,” is the classic connundrum), and it now seems trickier than ever.

Personally, after using TiVo for the past six months, I rarely watch a program at the time of broadcast even when I can. If there’s something on at 8 PM tonight that I’ll want to talk about at the watercooler tomorrow morning, I’ll set it to record, and start watching it at 8:15, just so I can skip the commercials.

No wonder advertisers are buying space on airplane overhead compartments, urinal deoderant cakes and bald heads.

This is a follow-up to last week’s class discussion, and my last post, on Mitch Joel’s hypothetical question: “What If Everything We Knew About Marketing and Advertising Until Now Was An Anomaly?”

The Television Bureau of Advertising (TAB) last week released results of a survey on adult consumer media habits that support my contention that traditional media remain far more influential for marketing communications than the internet — at least with adults, who were found to spend more than half of their media-consumption hours per day watching television.

The survey of 1246 adults aged 25 to 54 was commissioned by the TBA and conducted by Nielsen Media Research in January 2008.  Among the findings:

•    53% of total daily media hours are spent with TV, more than all other mediums combined

•    90% reported watching TV in the previous 24 hours, compared to 80% for radio, 72.1% for the internet, 58.9% for newspapers and 48.3% for magazines

•    The time spent with TV in the same 24-hour period was also significantly higher (222.7 minutes) when compared with radio (106.5), the internet (99.7), newspapers (22.1) and magazines (15.1)

•    TV advertising remains the most influential with 81.4% of the 25-54 adult segment, compared with advertising on the internet (6.5%), newspapers (5.8%), radio (3.9%) and magazines (2.3%)

•    Respondents said TV had the most persuasive advertising (69.9%), compared to 9.5% for newspapers, 7.5% for radio and 8.1% for magazines.

•    Among all media, the internet scored lowest in persuasive advertising, at 5.1%.

•    55% said they were more likely to learn about products and brands they might like to try and buy on TV, trailed by the internet at 18.7%, magazines at 14.6%, newspapers at 7.1% and radio coming in last at 4.5%.

While this survey suggests that online advertising has questionable persuasive power, Advertising Age’s annual revenue survey of U.S. agencies, also released last week, attributed an overall revenue increase of 8.6% primarily to the growth of digital advertising revenue.
Granted, the survey did not include adult usage of internet social media. But the dominance of TV over the internet in total hours of consumption, influence and persuasiveness are dramatic. Clearly, anyone who thinks traditional marketing communications will be rendered anomalous anytime soon needs to turn off the computer and get some air.

In “What If Everything We Knew About Marketing and Advertising Until Now Was An Anomaly?” Mitch Joel speculates, “Maybe Web 2.0 and Social Media is ushering in not only a new way for Marketers to think about how Consumers engage with Advertising, but it is the beginning of the “real” way in which businesses will connect with their Consumers.”

I think this is a simplistic view of the current chapter in the evolution of marketing communications (marcom). Granted, consumers can now have a more prominent voice than ever in the making or breaking of a brand, but all the blogging, online customer reviews and amateur commercials on YouTube only amount to a greater volume of one type of marcom known as “word-of-mouth.”

Word-of-mouth has always been part of a successful marcom mix, and the fact that there’s now more of it, and more dialog between company and customer, doesn’t signify that traditional forms of marcom, from Super Bowl ads to junk mail, are going away anytime soon.

Ad spending is certainly shifting, but spending on “one-way” media — print, radio, TV and direct mail — is showing no signs of dropping off as Web 2.0 activity picks up. That’s because the audience is still there and traditional marcom is still far more effective than social media during two critical phases of the marketing persuasion process: getting the attention of and generating interest among the greatest numbers of prospects. This is the specific function of advertising, and why many successful campaigns are known more for their entertainment value than their factual content.

Traditional media also packs far more impact, in a “medium is the message” way. If Move-On.org’s full page “General Betray Us” ad in the NY Times (dreadful as it was) had instead been a front-page blog on the Huffington Post, it would only have received the attention of other bloggers. Ho hum.

Mitch is overly exuberant when he says: “In watching Consumers leverage real power to share their insights, voice and passions, I can’t help but feel like this is just beginning and we’re entering into - what will become - how Marketing, Advertising and Communications was truly meant to connect.”

In fact, consumers have always had the ultimate power over marketers by voting with their pocketbooks. One of the principles advertisers live by is that the most a great ad campaign can do for a bad product is to get people to try it once.

And then they tell their friends…

As mentioned in a post last week, I’ve been considering recommending to one of my clients that they produce a podcast, but have refrained from doing so until I convince myself that a podcast would be a practical and beneficial undertaking for this company. I floated the idea past the marketing consultant who directs the company’s marketing communications efforts and she was unreservedly enthusiastic. She has a general and vague idea of what a podcast is, but at least knows that its one of those Web 2.0 things that’s getting a lot of buzz these days. What’s not to like? she seemed to say. She wants to see a proposal.

Her reaction reaffirms what I believe is one of the most appealing aspects of podcasting as a marketing communications “product:” It’s one of those things, like blogging and web video, that businesses think they ought to be doing to be “cutting edge.” And since I am ultimately in the business of selling and manufacturing marketing communications products — print, broadcast and online ads, web content, video, etc.— adding podcast production to my list of services has great appeal, because:

• It seems relatively easy to get clients excited about podcasting. Even if they don’t know what podcasting is, they like the sound of it. And it sounds more affordable than video.

• Podcasts are far simpler to produce than other “cutting edge” assets, such as web video, and seem less cumbersome to business executives than doing their own blog. As a sole proprietor, I like that I could realistically produce a client’s podcast without enlisting outside resources. I can’t do that with video. I wouldn’t even attempt to create a web page for a client without a graphic designer.

• Podcasts have higher perceived value than, say, a comparable amount of content on a web page or in a brochure. And they are far less of a commodity than other marcom tools, and so potentially more profitable.

I’ve talked myself into doing the proposal.

I’ve recently taken on a project to create a personal profile page for the hero of a popular video game that will be posted on social networking sites. I probably haven’t logged more than two hours total gaming time in my life.  Publicly, I follow the game industry for professional and academic reasons. Privately, I’m one of those old pharts who just doesn’t get it.

But thanks to my new assignment, and my perpetual fear that I’m going to wake up tomorrow morning and be declared professionally obsolete, I’m going to force myself across this generational digital divide by playing Grand Theft Auto 4.

Grand Theft Auto 4, (GTA 4) one of the most successful and controversial video games to date, went on sale at midnight and is expected to ka-ching over $400 million in sales this week.  Previous versions of the game raised alarm from content watchdogs about the story line, in which players take the role of a East European immigrant who steals cars, shoots cops and beats up prostitutes.

GTA 4 sells for $60 and its success is more evidence of the paradigm shift in the entertainment industry.  Only 7 movies have grossed more than $400 million, and none of them in the first week of release.  Game software sales are up 63 percent and game console sales up 46 percent over this time last year. Hollywood is looking on with envy.

Today’s NY Times quotes males in the game’s core demographic of mid-teens to mid-twenties as saying that, if it came down to choosing priorities, they’d sooner give up their cell phones than forego GTA.   For them, it’s not a question of  ‘Can I afford it?’ but of “How soon can I get it?’

It’s hard to imagine even the most hard core Star Wars fan making a comparable sacrifice to buy a movie ticket.  The article also quotes  game industry analysts and business school professors as saying that the game industry seems to be recession proof, and speculating that it’s thriving in hard times because of the escapist, and addictive, nature of the gaming experience.

My sons, ages 18 and 22 are life-long gamers and have tried many times, in vain, to get me engaged.  Despite my natural escapist, addictive tendencies, I’ve never come close to playing any game a second time. They will surely score a copy of GTA 4 this week, and I’m giving myself the assignment of spending at least several hours playing it.

If I have to shoot a cop and beat up a prostitute to stay current, well, it’s a living.