Gone So Soon

Recently I gave an interview about one of my favorite career projects, Carmen Sandiego. It was being researched by an archivist! I hadn’t been asked in years about the mysterious thief in the red trench coat and fedora. As big as she was in my life and on the national stage, save for a new motion picture in development, few people remember dear Carmen as much more than nostalgia. For that matter, who remembers the massive multimedia magic of CD-ROM computer games with all of 700mb of storage?

There she is. There she isn’t. Nothing lasts forever. Very little lasts long at all. That is the stuff of our culture. That is the stuff of our careers. Hold on too tightly to anything and you find yourself grasping ancient pixel dust.

Creative destruction is increasingly real and accelerating faster than ever. A new company comes, an old company goes. Brands emerge and evaporate before our eyes. In the start-up world, the notion of permanence is almost impossible to envision. Look forward with alacrity or don’t bother looking up from abandonment.

Contemporary taste is fickle. Technology trends are more fickle. Customer loyalty is most fickle.

Earlier this year I watched the National Geographic Channel limited series Valley of the Boom. I couldn’t tell if it was a dark walk down memory lane or an idealist’s time capsule of lost promise. Netscape—the big bang of the internet age—went from conception to extinction in all of about four years. The Globe—the biggest IPO of its time—was practically eviscerated at birth. Pixelon—a scam extraordinaire foiled by its own iBash—today doesn’t even make a decent trivia question on a game show.

Those were just three emblematic stories, real-world cautionary tales of boom and bust. You might remember the history of other exploded rockets, from Pets.com to Webvan. Maybe you don’t want to remember. Of the big consumer-facing internet companies that emerged from dotcom v1.0, it seems Amazon, Priceline, and eBay are the only lauded brands continuing to operate at large scale.

Google emerged in the second wave of the internet, capitalizing on all the failed portals’ inability to understand the essential nature of search, most notably the excruciating death spiral of Yahoo. Can you think of another important round-one bubble survivor? Which will be the next to vaporize? Jeff Bezos has already said Amazon won’t last forever. He knows inescapably it will be replaced by something fast moving and better.

Today there are reportedly 300 or so companies affectionately refered to as “unicorns.” These are start-ups largely in the technology sector with a valuation of more than one billion dollars regardless of revenue or earnings to justify the bragging rights. You are undoubtedly familiar with many of their quirky names: Uber, Lyft, WeWork, Airbnb, DoorDash, Slack, Pinterest, Instacart… these are widely regarded as some of the good ones.

How many of these brands will today’s schoolchildren recognize when they become adult consumers? You know they won’t all still be around. History assures us of that—unless of course this time is different (and when someone tells you this time is different, keep your hands on your wallet).

Early last year I wrote an article titled Is Facebook the Next AOL? At the time I wasn’t sure. Later in the year I wrote about it again. By then Mark Zuckerberg had testified before Congress and I had become sure. Facebook is going to fall hard. The level of cynicism over there is no different from the hubris of America Online. Today cash is pouring in and it has no serious competitors, so hey, it must be invincible, a forever brand!

Facebook only has one major problem corroding its innards: customers don’t trust the people running it. No product or service can last long that way. It’s hard to be a forever brand when your promise is held in contempt. You can pay lip service to addressing the failings in your business model, but if the core concept is fundamentally conflicted, you can’t beat the reaper.

Even General Electric has fallen from grace. GE, the one original Dow Jones industrial average company dating back a century, is no longer in the Dow 30 index. How can that be? Yes, it is still an enormous enterprise, too big to fail, one might say. Does that mean the brand matters a fraction as much as it did a decade or two ago?

Nothing lasts. Creative destruction is consistent that way.

Google will last a long time because it has built a mighty moat, but it won’t last forever.

Apple? Depends on how it deploys its seismic war chest of cash.

Netflix? Hard to imagine, but it seems like a transitional platform. It could be bumped off.

Microsoft is evolving again, truly embracing the cloud, so maybe it will be the new GE. It has lots of runway to continue reinventing itself, but like GE, no runway is infinite.

What’s the point? Think about your own Carmen Sandiego, that gig you love that will be gone someday, and plan your career accordingly. Are you ready to lose the inevitable and discover what comes next? The ship you are on may appear to be built out of steel, but steel eventually rusts. Are you looking beyond the bow?

Creative destruction wins every single time, but don’t despair. Where old jobs become obsolete with antiquated value propositions, new jobs emerge requiring fresh ways of looking at the world. I doubt that will change. While so many companies have come and gone in the last quarter century, the planet has lifted two billion people out of abject poverty. There are new pockets of middle-class workers emerging all over the world in an increasingly shared global economy. That seems like a decent enough tradeoff for a few trampled unicorns.

Maybe someone will even capture Carmen Sandiego. You never know what can happen when you let go of everything you don’t need anymore.

Advertisements

Evolving The Ad Measure

Last week I spent a day and a half at a four-day conference in Los Angeles known as Digital Hollywood. I can remember speaking at this conference a number of times back in the bygone CD-ROM years, when QuickTime v1.0 was all the rage and the notion of getting postage stamp video to play on a PC was gleefully deemed the dawn of FMV (full motion video, which was still about 10 years and many versions of QuickTime to come). Digital Hollywood has been growing steadily since 1990 and is now hosted in multiple locations throughout the year. It has become well-attended and thrives on emerging trends and technologies that carry with them opportunity and hope.

While I can hardly say my tour through the panel discussions at this conference was exhaustive, my experience was that many people were there in search of the question: If I build it, will they pay? The broad desire seemed to be for so many passionate and creative souls, if they put their heart into creating digital content, is there any chance at making even a modest living at it? The big media companies continue to study the little companies, still trying to solve the riddle of how digital pennies can replace analog dollars before the next wave of Creative Destruction breaks on our Company Town shores. The little companies and individual voices remain excited by the notion that self-publishing has zero barriers to entry, and with no constraints on distribution, anyone can be in the communications game through YouTube, a blog, a web site, an email newsletter, a Facebook page, and with just a little bit of push a mobile app. The breadth of creativity screams freedom as well as opportunity, yet when you gather in the halls, creative satisfaction seems to be outpacing financial satisfaction at almost every level of the pyramid.

When asked about business models, studios and individuals alike tend to respond most often with the word “advertising.” There are actually several ways to monetize digital content (subscription, syndication, e-commerce, data mining research), but the approach you hear most is advertising. It continues to strike me as ironic that the greatest and most liberating technologies of our day so often point to something as old school as advertising to fuel them, as I am sure it surprised pioneers from Google to Facebook. We have seen the shift in advertising wreak havoc with print and radio and outdoor, and finally it is beginning to put pressure on television. My question remains, why aren’t traditional television ad budgets under significantly more duress?

A very quick primer on advertising, there are two basic kinds: brand and direct response. Brand marketing attempts to get you to encode a message and take action later, direct response attempts to create instantaneous demand and get you to take action now.

When you watch a network television show in its time slot and a commercial tells you how the floor wax you are seeing in action will get your floors to sparkle, that’s brand advertising. It is meant to get you to remember the brand you saw on the commercial in a positive light when you are in the floor wax section of Safeway. That is achieved with reach (how many individuals see the commercial) and frequency (how many times they see it) which add up to affordable tonnage. If you are my age and can still recite the ingredients in a Big Mac, you have a pretty good idea how much money McDonald’s invested in the reach and frequency for that brand campaign when we were kids, super tonnage to burn into memory that pithy creative construct.

Mad MenBrand advertising is usually measured in terms of broad sales increases in a product line or shifts in competitive market share as a result of the campaign. Skippy buys an ad schedule across TV, print, and radio, spends a certain amount, then measures over a period of time what impact it has on sales of their peanut butter. They may experiment then with new commercials, or add weight to TV and subtract it from print, trying to get the best return on investment possible. You can imagine what an inexact science it is, but if you pay X for your ads and get more than X in increased sales, you at least know your campaign paid for itself, and from there, the sky is the limit. In the 1960s and 1970s with three TV networks, it was really hard to go wrong with the kind of TV buys we now enjoy memorialized in Mad Men.

Direct response advertising used to be the less polished hard sell stuff we saw on late night TV or UHF, where the commercial or infomercial shows you a miracle vacuum cleaner obliterate a thick pile of goo and then gives you an 800 number to respond now and buy it. It is also the kind of advertising that worked well in print and catalogs via mail order. To this day it remains simple and exact to measure because there is little noise in the equation. You run an ad, your switchboard lights up with orders or it doesn’t. You know what you paid for the ad, you know how many orders you got. It’s not very glamorous, but compared to brand advertising, it is easy to evaluate and research is precise.

The glamour factor shifted with the internet from brand to direct, because the economics shifted with the internet at huge scale. On the internet, direct response, or performance based advertising, mostly trumps brand advertising. In the digital world, brand advertising became known as display advertising—in the consumer vernacular, banner ads (industry jargon sometimes calls them dots and spots) where payment is rendered by the advertiser for delivered inventory—insertion order invoiced tonnage just for showing up. The click-through rate on most display ads today is almost not worth measuring, but that does not mean they are not impactful. Most of the ads you see on Facebook are display, lots of reach and frequency, and much better targeted by interest level than ye olde TV.

Yet the glamour business of the internet remains keyword advertising, the logical evolution of direct response advertising, the sponsored links that have been most successful for companies like Google but are also used in comparative shopping sites and similar layouts where the ad buyer does not pay for an ad to be seen, the ad buyer pays for a click on the keyword link, and then counts on a certain number of clickers to follow through to transaction (that means buy something). Here again, the direct response model is more precise than the brand model and can be measured with sophisticated analytics, while the dots and spots—and now with video streams commercial insertions in Hulu and YouTube much like TV only shorter—should be fully intended to contribute to downstream sales activity, but are much harder to evaluate mathematically.

In the world of TV, brand still rules. In the world of internet, direct response still rules. The reason? Performance, also known as Return on Ad Spend (ROAS). You can still drive big sales and shifts in market share via a TV brand campaign, and you can do the same with an internet direct response campaign. So my fundamental question remains: why hasn’t the science of efficacy and research advanced to show how display campaigns online can approach the same sort of massive scale impact on consumers that they have on TV?

There are many things we can measure in both brand and direct response campaigns, some would argue too many. If McDonald’s stopped spending completely on TV and moved all that budget to the internet at better prices, would it have a negative impact on their business? Probably, or they would do it. The question is, how much can they move, and how much more affordable can it be for them to start moving more of it? How can they tie market share gains back to internet display campaigns? Attitude and usage studies—the kinds of email surveys you get asking if you have seen or remember a campaign—aren’t nearly enough to convince them they can move billions of dollars of burgers at the counter without an accompanying TV vehicle. They need digital brand campaigns that sell goods and services at scale and science to attribute the success—and we don’t yet have either.

Going back to our passionate content creators at Digital Hollywood—what do I think they should be worried about for their sustenance? I think their fate will be cast by leapfrog advances in advertising research, and I think those advances will come. With advances in the science of display advertising efficacy in digital platforms whether fixed or mobile, the big brand dollars will have to shift from television to non-television. It is not just a question of eyeballs (mind share, share of voice) shifting with a generation that has grown up digital, it is a question of what works, the reach and frequency and cost efficiency to make or break predictable sales of consumer products. When we have that science to show how digital spending improves on the job of TV, the big brand dollars will shift and content opportunities will flourish.

Almost every graph trend shows that the future for digital media is nothing but bright, but until the research and reporting platforms rescue brand advertisers from the opaque, illusive promise will remain greater than reality. That shouldn’t last much longer. Tell your digital research departments to put those monster TV budgets in their gun sights and keep innovating. It’s really good money if you can get it. And we will.