Twitter to announce Ad Platform + Bad News for their VC Backers

Supposedly today (or soon) Twitter is going to announce how they will start doing advertising. I am very curious what they think. I felt a sure fire one is Ads on the static web site outside the live feed. I also am curious about the different platforms. I am not sure if tweet deck etc are owned or part of twitter. Which means they then have no choice but to insert ads into the live feed.

That all being said if they insert ads to be clicked through (since they still have the 140 character issue with no graphics) I am curious what the click through rate will be. Obviously unless you click through I can't see a 140 characters being very valuable for an advertisers.

On top of that is this report from the San Francisco Chronicle:
Link

Which means number of accounts mean nothing and number of unique visitors (last month it reached 70 million) mean nothing. If I was advertising I want to know how many people log in once per day because that is the only chance for your ad to be seen. I do say chance. I am an active Tweeter on 4 accounts. I use Tweet Deck. But I also only see maybe 15-20% of the Tweets if that each day. Why? Because I am not watching the feed all the time. There are times during the day that I am. Everything else I never see. But this is no different than almost every other Advertising Medium. You pay for a chance to be seen. The trick for Brands is to value that chance properly and not over pay.

So if an active tweeter is tweeting say 4x per day(very low estimate). Then you need to establish how many like me are on multiple accounts (my case 4)....there probably is only like 5-10 million people on the site using it per day. Which is a lot less impressive and makes Twitter more of a niche. So my feeling is a well placed campaign if Twitter can send an Ad the moment someone logs or Posts a Tweet can reach a few million people. But the Log In or 'Tweet' moment is truly the only moments that can guarantee it is viewed. After that it is a crap shoot. So that 'moment' does have high value.

As for Twitter using Behavioral Targeting based on what a Tweeter tweets I think that actually will not work. If someone uses my post key words to Advertise I will guarantee most will be a misfire. Today I mentioned Toyota several times but I am not in a market for a car, and my Tweets were about the recall. Do I want an Ad from Toyota or competitor? If I state I had a Roast Beef Sandwich for lunch does an Ad from the Chicken Industry have much value? Especially the 140 character limitation. We shall see. Don't forget when firms bid on key words this serves them and not the consumer. It actually will eliminate best choice in favor of who paid the most.

That all being said Twitter has a good side and a bad side. The Good side is like Charlie Rose there are a lot of very intelligent and successful people who use Twitter to network and share ideas. So these are High Value Targets for advertising. There are also a lot of great causes that have tweet streams like Help Haiti.

The Bad side is if you look at some of the hash tags there are some that contain nothing but vile tweets. I was appalled at some of them that attack Progressives and Obama as Nazi's, Terrorists, Marxists, Racism, Death Threats etc. There are plenty of Progressive tags attacking Glenn Beck and such, though Progressives seem to be a bit more passive and less vulgar when you view their Tweets. But does a Brand or Advertiser want to randomly show up in these streams? This has been You Tube's Achilles heal.

Privacy and Piracy

There was a study done in 2009 to determine the public's view on various forms of Behavioral Targeting for Advertising. The study was done by major heavy hitters in the Social Science Academic world. You can download and view the study here:

Link for SSRN Study

I am not surprised at the findings. We as a society have a right to privacy. It is in the Constitution. Every time there is an infringement there is an uproar. Whether this is Bush's NSA eavesdropping illegally on Americans (my view btw) or Facebook constantly trying expose people's content and behavior for monetary gain (Beacon, etc).

Now I have heard people like Pete Cashmore at Mashable state the end of privacy. Granted he is biased because he is making his fortune reporting and advising on social networks. This blog doesn't agree. Yes we all expose ourselves to a ridiculous amount online. But as the study proves we want control of that exposure.

Brands and Ad Networks view is why do we want to see advertising that isn't relevant to us. And thus they should be allowed to shadow us to improve what we are exposed too. But that is a self serving view because they want to increase return on investment, vs necessarily looking out for the consumer.

So there is a clash between privacy and piracy. Facebook in the terms and conditions owns the content we post and can use it to make money. Of course we view that stuff as personal and private, so we feel they are pirating our content. And while we use social networks for a broad range of communication from superficial to intimate, we look at them as private spaces. Similar to one's living room or bedroom.

Crossing these lines could kill a business. We don't like our information sold and hijacked. I myself can not wait for a true competitor to Facebook and the moment I find one I am going to tell everyone possible. We tend to block as much as possible from the world outside our networks. This is why we have caller id and why so many people keep their accounts private on Facebook. This is why we are Ok with Amazon using Behavioral Targeting to recommend products, but freak if we find out Google has been following us. It is also why Ad Blocker Plus (42 million downloads per year) and No Scripts (18 million downloads per year) add-ons for Firefox are so popular. This gives us control.

One note on this study is the fact that over 30% of the people surveyed think Managers at companies that get caught behavioral targeting without permission should go to jail. I myself take this all seriously. I have a Student Pact on my website for my Skrib Sheetz! service letting college students, who my service targets, that not only will none of their information be sold or given out, but that if they participate in the Mobile Marketing feature I won't give my clients their phone numbers for future contact.

Thoughts on Social Media and Being Viral

Confucius ponders:

If a Viral Video is Viewed 1 million times but 20% of the viewers watch it more than once, or several times...how many people viewed it?

If 100,000 people tweet negative sentiment about a brand or product, but it is only viewed by 10% of their followers, how many people viewed it?

What is the true population number for an activity where brands need to react? 1 million is only 1 in 310. or 0.31% of the population.

A viral video viewed by 500k unique viewers is only seen by 0.16% of the US Population. Is that really viral?

Ratings and Measurement Wars

One thing that has fascinated me is the battle between Media Outlets and Brands/Advertisers over ratings and measurements. Whether this is online or airwaves. Brands pay a fee for each thousand people an Ad is viewed or heard by. It is in the best interest of Media Outlets to amplify the numbers even if they aren't accurate. Brands willingly pay for each person reached but they get ripped off if they pay for phantom contact.

Measurement is getting better, BUT it is still all estimation. Until we have big brother in every room, or wherever we go, proving we actually viewed or heard something, measuring will be an estimate. I sure hope and pray we never have big brother.

So this means Media Outlets and Brands have to compromise, and why ratings services like Arbitron and Nielsen exist. The problem right now is as measurement gets more accurate audience numbers drop, causing revenue loss to Media Outlets. This is fair, but any business that can lose revenue is going to fight to keep that revenue, whether that revenue is ethical or not.

I think he biggest areas of audience inflation are for TV and for online measurements. So many folks are multitasking now. I watched the Olympics last night while watching State of Play on my Laptop. I had the sound off the TV and would pause the movie when I saw the snowboarders ready at the gate. The commercials played in my room. I was in my room, I neither heard or saw most of them. Yet NBC made money on me, and the Advertisers lost money on me. Or when someone falls asleep with the TV on. Advertisers are paying for that sleeping person.

As for online I truly think clicks are the best measurement. Time spent on a website is truly today a bunch of crap sorry to be blunt. With all the browsers offering tabs and he ability to be on a website live, with it hidden from your views for hours upon hours, time spent is a ridiculous measurement. But Facebook pumps the time spent endlessly, trying to make it look like people spend all this time on their site when I bet the reality is 10-20% of their claim. At least clicks can't be fibbed!

But this leads to another dilemma my inquiries have never been answered because those I ask would never, ever want to admit this is going on. Currently Firefox has 22% of the browser market. 700,000 Firefox users download the Ad Blocking software that blocks 95% of all digital ads...and even blocks search engine paid search results (like Google's Ad Words). At least with Google I am pretty sure that you only get charged if you click through the link. But Banner Ads? What if my browser blocks them, but they were still served to my screen. Does a Brand get charged for that? They shouldn't be, but no Ad Network has responded to my question about this. On top of the Ad Blocker issue because I use Windows and have had virus infections launched from java script and flash before, no scripts run on my browser unless I unlock a website. Which means none of the Ad Networks themselves ever run on my machine. They still serve Ads to specific sites I have unblocked/Unlocked because 1] they are trusted and 2] for free content I feel this is fair.

So measurement wars will not end anytime soon. I think honesty needs to be the motto for Media Outlets because Brands/Advertisers want to reach people, they just don't want to pay for phantom contacts, or feel fleeced by their vendor.

Clutter Clutter Clutter and Lemmings.....

I have railed against clutter in the Advertising-Media Industry in the past. That more advertising isn't the solution. If the estimates of 50% of Ad Spend is wasted, spending more isn't a solution it is spending better. I have noticed over the years that every time a new medium emerges that enables advertising, the ad spend follows...in massive quantities. And that brings clutter. Clutter clouds out your message. People are bombarded with too much, while their ability to consumer and process advertising remains the same.

I use the term Lemmings to describe the rush into new media areas by everyone from so called 'experts' who claim to know stuff that is new even before enough time has passed to have an expert (like Social Media or Mobile Marketing today being still in their infancy), to the techies and VC who see money in building platforms, and the agencies who tell their clients they will lead them to the promised land...but only if they spend more money.

Recently I have done two crude studies on mobile marketing and social media using email as my reference point. And the studies were based on figuring out when the clutter emerges. When will people either start opting out or just deleting without paying attention or responding to the ads. We all have a myriad of news, causes, and businesses that we signed up for email from. Now we get so many that we get more opted-in spam mail than we get real mail from friends, family etc. I recently had to close a very old hotmail account I used for personal use since 1996 or so because it got corrupted on the hotmail server. So I am migrating to my gmail account. I am slowly noting as I add opted in requests for emails from businesses etc how many I am just deleting immediately upon signing in.

When someone tells me that Mobile or Social Media is the answer for Brands to reach consumers I ask very simple questions....don't these businesses already have massive email databases? Do they not know who is a customer and who is not? With everyone having websites why do they need a fan page when they have a fully enabled and interactive website? And why are Social or Mobile different?

I am in Mobile Marketing as a business, and I do honest objective consulting. Read my blog I do not coddle anyone. I do praise when something is done right, with class and value to the consumer. I have a collegiate mobile marketing service that refuses to save any students phone numbers, sell them to anyone else, or contact them later for future offers. My service requires the students actively participate for each campaign so that it is fresh to them each time. I reach the students directly in person with Brand Ambassadors who gives them something directly with the call to action. I can prove ROI through every step of the process.

How long will it be before all these Mobile Loyalty Campaigns become a negative return, where you are paying to host the campaign and send out the texts and get very little in return? Not because they aren't interested in your product or service, but because they are getting 10, 20, 50 texts per day because over time they kept opting in to future push advertising?

As for social media I use Tweet Deck for Twitter. It allows me to use 4 accounts at once which has increased my viewership of tweets from about 8% to now 10%. So only 9 of 10 Tweets do I never see now. And in my busiest account I have only 140 accounts I follow. I see people with hundreds even thousands! Try getting your advertising through that mess. As for Facebook I hate the interface but love the technology. I also hate the Management for being exploiters and abusers of the one thing that keeps them in business...their account base. When I log in there is always 300+ news feed updates and I only scroll through the first page of 25. So you can imagine what I am not seeing. So what if a Brand has 400,000 fans if only 2,000 are seeing any messages from the fan page?

Clutter Clutter Clutter.

One note for the benefit of the Brands on Social Media, though your social media agency and employees will hate me for this. Do you really know what is going on or are you being snowed? I know someone who does social media for a non-profit, and they get pitiful numbers of emails opened. When the report is sent to show how things are going, they brag about number of people on the email list, and number of emails sent...the open rate is omitted. When your told you have all these fans and followers do you really know the effectiveness? You really can't measure this. It is all guesstimating.

And guesstimating is ok. Most of Advertising ROI is based on it. It's honesty that is important.

Fickle with Short Term Memory Lapses. Ethics anyone?

I know you were thinking I was going blog about the stoner-slacker species. But in fact I am talking about our species. And it fits. And it gets worse every day.

Back in the day when times were simple. When we spent all our waking and sleeping moments stressed about food supply, basic necessities, and hoping some armed group with swords and bows didn't decide to over run where you live. Back then the smallest of good will gestures could earn a lifetime of good will back. Screwing someone could lead to the reverse.

Today with the news and gossip on 2 second sound clips and our days broken up into micro segments we are as erratic, forgiving, and forgetting as ever. This truly benefits brands specifically because of this fracturing of our time vs reality view. For the average person who cares about ethics and this planet we all try to do the right thing but often we have no idea if we are.

I recently read a very disturbing article in the Economist about Vietnam imprisoning political dissenters for multi-year terms. One over 10 years for doing nothing but speaking out peacefully. So I decided I will try not to buy products made in countries with oppressive Governments like China, Vietnam, Saudi Arabia etc. The problem is in 3 months something else will grab my attention and I will get lazy (slacker) and forget to check labels here and there and eventually all together. Unless I am getting mail and seeing news reinforcing long term I will forget. And companies like Nike and Exxon who do business in countries with bad governments will over the long term have no reason to move their operations.

And this short term memory loss, sadly also helps reduce a company's incentive to do the right thing. Nike pulled out of the US Chamber of Commerce in protest over the Chamber's opposition to carbon regulation. Not completely altruistic. Nike has plants located in low lying Southeast Asian countries that would be under water if oceans rise from global warming. But still a positive move. A few months later no one remembers! Technically as a reward I should be choosing Nike products when made in a non-human rights violating country when all things are equal vs their competition who did not withdraw from the US Chamber of Commerce.

One positive is that ethically responsible Public Companies tend to out perform their peer competitors in almost every study I have seen published. So maybe ethical business practices in reality magically are more cost effective with a higher ROI than abusive practices.

The risks of unethical behavior I feel will always out weight the reward. Simple examples is there is potential for jail if you cook the books, operations being halted if your abuse of workers causes a strike or makes it hard to attract talent, or calamity when the oppressive foreign Government protecting your business (oil rig or clothing factory) get's over thrown via revolt with them nationalizing your business (see Iran and Cuba revolutions).

So in closing, the way out society has developed our Mode of Daily Operation after the industrial revolution, has become a deterrent to companies doing the right things. There tends to be a lot of PR but very little substance when it comes to businesses changing habits to be more ethical when it comes to workers, environment, and the inhabitants of this planet. We don't boycott Exxon over Human Rights or the environment when they are $0.03 cheaper than the station across the corner. I will succumb and buy my next running shoes from China or Vietnam potentially due to lack of alternatives. And companies like Nike will sometimes ponder if doing the right thing was worth it. And it is 'us the people' who are to blame for this situation. But luckily the 'profit incentive' tends to reward ethical behavior over the long run.

Best Street Advertising Ever

This was taken on Fordham Road in the Bronx, New York.

Amazon vs the Publishers vs the I Pad vs the Others

I am a life long student of the business world. I try to base my views on what is right/ethical, in my view, vs what is best for one group within a business industry ecosystem. I also know that business is cut throat and if you can take more that is called profits. If you don't someone else will.

We all know this is kind of B.S. There are happy healthy mediums if you can get rid of ego's and entitlements. When a major technology breakthrough disrupts a whole industry ecosystem, the dead weight gets exposed and there is a long slow march to oblivion if they don't change and follow a new path.

I truly feel the emergence of the E-Readers and Tablet computing are great develops for the planet. Especially for the environment. If we didn't need to cut down trees for general paper use it would be a major boon to the health of this planets air, water, and land. But there is sizable infrastructure and jobs in the timber, paper, printing/publishing and transportation industries. Just for books and magazines! Prior to E-Readers these businesses were vital to the book and magazine industry. But soon they will be just extra cost that is not needed. Its the words, the content that has value and we buy. We aren't buying paper or timber, though currently they are part of the delivery system of we want to buy the content.

Amazon is fighting Publishers over the price of he E-Books. Amazon just agreed with one big house that new books will be sold for more and they get 70% of the sell price. And there is this major panic with Apple coming into the game to ensure the higher revenues. And here is where the Publishers are deceiving themselves. What is a fair price for a new book electronically vs hardcover. What percentage of the $22 to $25 hardcover price is the cost of timber, paper, printing, manufacturing? If it came in at $8 and that cost was gone tomorrow the industry would see Revenues drop 33% and they would panic. But in reality the value and revenue for the content, content development, and marketing are the only core costs, everything else is bloat. How it is delivered and consumed might constantly change over time. But the variable non-essential revenue sources should not be what is vital to an industry's view success.

The Positive Side of the Agency Review

I hope one day I have business worth defending. I have read plenty on the costs of defending and pitching new business. I have seen Agencies walk away from contracts worth hundred's of millions. You only make that decision if the Agency-Brand relationship is dysfunctional or antagonistic.
Often by that time it is hard to repair something that is broken. But that is not always the case.

It would be bad business practice for a company spending tens to hundreds of millions a year on advertising not to look at other Agencies or at least hear their pitches/advantage claims. You always want to have best fit and keep your Agency from becoming passive. When this occurs there is a good chance the incumbent will keep the business. If your operating honestly and in the best interests of your client all the time, there should be a good relationship between the two parties.

Whether or not Mindshare not only defended their Unilever account for the US and gained Canada Media Buying duties as a strategy or lucked out, it should be strategy. A review should be looked at as a prime opportunity to not only defend, but increase your market share with that client. The major advantage is while the competitors will be showing what they 'would' do for your current client, you get to show everything 'you have been doing' for the client. And if you have been doing a great job this is the perfect time to ask for more business.

Think about the potential to use guilt ethically and honorably without much effort. Your being asked to spend money to defend business your excelling at. Your client knows this. And if your working together properly they will feel like a partner, who is being forced to look around. Kind of like your dating someone who insists every 2 years to date other people just to ensure they are with the right person. Then when they realize they are they feel bad and buy you gifts or take you out to make up for it.

Obviously Agencies are not pleased when they are requested to defend in a 'review'. They know whether they have been performing and if they have been, this is a great time to gain business.

The Convoluted Advertising Ecosystem

Yesterday I wrote about the Media/Entertainment world. Today I wish to discuss the world we operate in...Advertising. I am new to Advertising. Only 2 years in and I have an outsiders view. My background in B2B Sales, Business Development to Major Industrial Businesses like Lockheed Martin, Chevron-Texaco, Exxon-Mobile, Raytheon, Ford Motor Company etc really is completely foreign to Advertising to consumers. I have a Finance Degree but my social life is mostly around creative types in music, art, performers etc. Since I have always championed my customer, always sought to add value, and refused to take money just because I could unless I helped my client, I am actually the type of person the staid and entrenched entities in the Advertising-Media World love and loathe. I can help a Brand focus better to maximize their Ad Spending. I can help an Agency prove their worth to Brands to help them increase their value which always seems to be fuzzy.

The biggest issue with marketing is two fold. First is how do you connect marketing with sales. How do you value the different areas to prove you spent the Brands money well. Secondly is how complicated media plans are, especially today and now they are getting even more complex. To top this all off Agency's tend to specialize in certain niches like Mobile, Digital, TV etc, as well as for the actual Media Buying. And when you operate on a national scale combined with the fickle and chaotic decisions people make when they buy, I truly feel this is just as complex a task as when I worked on Missile Defense Programs for the Department of Defense.

Plus there is competing interests all over the place. I might tell Pepsi they can cut their advertising budget by 15% and they won't lose a penny in sales. Pepsi's Agencies will hate me for this reduction in revenue...even if it is true. It is not in an Agency's best short term interest to be honest if it means reduced billings and profits to be honest. But not being honest leaves you open to being exposed and have your business put out for review, which for long term is not in your best interest. This is why the review process sucks and hurts incumbents. Is the reason for the review a problem with creative or a problem with costs in the view of the Brand's CFO. As much as all you Creative types hate us Finance types, we control the purse strings. And while you may feel we aren't willing to spend money to make money, you should go see the expense reports for the sales team. It is the inability to measure the return on investment that creates all this chaos. And Brands and Agencies feel helpless.

Think of a nationwide media blitz for an upcoming Blockbuster Movie. You can spend all you want and force feed the information to the consumers but if the movie sucks it will bomb. How many times do I need to see a trailer? If I see it 25 times isn't 20+ of those times wasted money? And billboards and poster work across the nation? How do I know the placement is good? No one can do that on a massive scale. No one not even a media buyer/planner. They trust the local folks and take their word for it. And what about digital? My trailer had 1 million hits on You Tube. That was free yet I was told 20 million saw the TV trailer but that can't be proven because we are not in people's living room.

So a CFO who see's that his star salesperson spent $25,000 in entertainment expense brought in $30 million in sales. But the Ad Agencies can't truly prove their value which creates friction, distrust, and animosity...even if the Agency is kicking ass on behalf of their client. and sadly a product that sells itself, like an IPod often the Agency takes credit. And when the Agency kicks ass, but the product fails because it sucks, they get blamed.

At least with Missile Defense I can see if the interceptor hit the target, and how often.

The Convoluted Media Ecosystem

I have been thinking about this for quite a long time. My view point comes from several places. First is my Finance Degree and CFO view. Second is my many years in Sales/Business Development. Third is my new Advertising Career. Fourth is my view as a consumer. When it comes to Business Models Media is the hardest to be successful in because of all the competing special interests. It is almost like Politics. People love entertainment. They spend a lot of money on entertainment. And without the content the rest of the ecosystem is dead. We all love great content.

But to create great content and be profitable you need your revenues to exceed your costs. And the middlemen inflate the costs and your end user views of your content's value after all the middlemen add their take onto it. And there are parasites like Journalists and Media that use the content for monetary gain without being forced to Ad Value. But the parasites can often Ad more value to the content creator than the middlemen. And everyone wants to defend their business/revenues even if you don't have an inalienable right to exist. See I told you Convoluted.

One great example is the music industry as it was vs. how it is now. The old industry is crying because revenues are down. But consumers and the content creators are consuming and selling more than ever, just cutting out the old industry middlemen. Who is being cut out? Record Labels. Packaging Companies. Radio. Media like the Grammy's. Do we need them? Not really. When CD's cost $14 each the artist only got $1. $4.50 was for packaging. And a band with 4 members plus management if they sell 1 million units making them platinum only made $1 million to split between them all. A nice bit of change but won't make you rich.

But now I can create music. Promote it free online. Sell it myself. And tour and make as much money or more than when I had all the bloat.

What about TV-Cable? Similar situation. They create something but added onto the cost is the technology to send it (cable, internet), the technology to view/consume it (TV's, Sound Systems, Computers). The media that is used to promote it all.

And while Ads can help reduce the costs for the entities that make money off the Ads, the rest of the entities really don't care. TiVo and DVR OEM's do not care about Cable Channels needing Ad revenue, or Cable companies needing subscription revenue. Apple doesn't care that I-Tunes destroyed the CD packaging industry. Or the internet/social media destroying the Record Companies/Radio niche of promoting music. But the fact remains if the people who make the content can not make a profit, the whole ecosystem collapses.

So what really happens is the creators cut costs. That is why TV is filled with cheap reality shows vs stellar content. If we are only willing to pay enough to support crap we get crap. See You Tube! And sadly as sheep most people watch the crap, because they refuse to either not watch and find something else to do, or they have decided they will watch anything. But this does a big disservice to the content creators and artists who are forced to dumb down what they do just because we are all lazy and cheap.

Visa does incredible campaign in Grand Central for Olympics...why?

Link to Source

We all have enjoyed the battles between Visa and Master Card over the years. But the whole premise and whether it is money well spent is subject to debate. The reality is that the cards are not theirs, they are Bank Cards. And each card has different rates, terms, and benefits depending on the Bank. Visa/Master Card make their money via transactions. Banks via keeping a balance. Most people decide which card to use based on the credit limits/how much credit they have, benefits (like Airline Miles) and the card terms. Visa/Master Card have nothing to do with these things. Since there is no competition on transaction fees at point of sale most people really don't care about Visa or Master Card when at the point of sale. So is the money spent in sponsorships and advertising really well spent? Wouldn't kickbacks or lower transaction fees to consumers be much more well spent?