Monthly Archive for June, 2007

Thoughts on attention, advertising, and a metric to measure both: keep it simple

Advertising on the Internet is exploding. Assuming you accept my premise that the Internet will be the backbone of the world’s attention economy – then, I am sure you can see the urgency of developing an effective metric for measuring audiences that consume content online. Advertisers are expecting more accountability online and there is increasing demand for an independent third-party to verify results. But you can’t have accountability and there is no value in audits, if one place measures in apples and the other in bananas.

The Attention Economy is seriously lacking an effective measurement system

Ajax broke the pageview model of impressions, the one billion-dollar practice of click-fraud is the dirty big secret of pay-for-performance advertising, and the other major metric of using unique visitors (through cookies) is proving inaccurate.

It sounds crazy, doesn’t it? The Internet has the best potential for targeted advertising, and advertisers are moving onto it in stampedes – and yet, we still can’t work out how to measure audiences effectively. Measurement is broken on the Net.

(Although I am focusing on advertising, this can be applied in other contexts. An advertising metric is simply putting a monetary value on what is really an attention metric.)

Yet when we look at the traditional media, are we being a little harsh on this new media? Is the problem with the web’s measurement systems just that it is more accountable for its errors? After all – radio, television, and print determine their audience through inference which are based on sampling methods and not actually directly measuring an audience. Sampling is about making educated guesses – but a guess is still a guess.

Maybe another way of looking at it is that the old way of doing advertising is no longer effective. Although we can say pageviews are broken due to AJAX, the truth is it was always an ineffective measurement system, as it was based on the traditional media’s premise of how many viewers/subscribers theoretically and potentially could see that ad. As an example of why this is not how it should be: when people visit my blog via Google Images, they hang around for 30 seconds. People that search for business issues on the web that I write about, like stuff you are reading right now – spend 5+ minutes. If both are equal in terms of page views, but the later actually reads the pages and the former only scans the content for an image – why are we treating them equally? My blog is half about travel, and half about the business of the internet, which is why I have two very different audiences. Just because I get high page views from my travel content, doesn’t mean I can justify higher CPM’s for people that want to advertise on internet issues. Not all pageviews are the same – especially when I know the people giving me high pageviews, arn’t really consuming my content

Another issue is that advertisers are so caught up on who can create the most entertaining 30 second ad, that the creativity to get people entertained has ovetaken the reason why advertising happens in the first place: to make sales. The way you do that, is by communicating your product to the people that would want to buy it. If I placed advertising on this blog, from people who want to do web-business related stuff, they should only pay for the peope that read my blog postings for 5+ minutes on the Attention economy, not for the Google images searchers who are looking for porn (my top keywords, and how people find my blog, makes me laugh out loud sometimes!).

When we create a metric that measures attention, lets be sure of one thing: the old way is broken, and the new ways will continue to be broken if we simply copy and paste the old ways. New ways like click-through ads that appear on search results, and account for 40% of internet advertising is not how advertising should be measured. The reason is because it is putting the burden of an effective advertising campaign, on a publisher. Why should a publisher not get paid, with the opportunity cost of not using another ad that would have paid, because of the ineffectiveness of the advertisers campaign strategy at targeting?

When measuring audience attention, lets not overcomplicate it. It should be purely measuring if someone saw it. As an advertiser, I should be able to determine which people from which demograph can see it my ad – and yes, I will pay the premium for that targeting. If it turns into a sale, or if they enjoyed the content – is where your complex web analytic packages come in. But for a simple global measurement system, lets keep it simple.

Concluding thought

If I stood at the toll booths of the Sydney Harbour bridge naked, some people will honk at me and others won’t. If I can guarantee that they can see me naked, that’s all as a publisher I need to do. It’s the advertisers problem if people honk at me or not. (Not enough honks means as a model I should still get my wage. They just need to hire a better looking model next time!)

Australia as Silicon Beach

In January, David Bolliger coined the term “Sillicon Beach” to refer to a bunch of Sydney based start-ups – continuing an international trend of regionalising hotspots of tech innovation that aspire to be like Sillicon Valley (my other favourite is New York as Sillicon Alley). Although it’s not the first time the term has been used, everyone from Perth, Melbourne, Newscastle, Brisbane, and the rest are claiming they are the real silicon beach.

So seeing as our population is only 20 million, and we are one big island continent anyway – I think I am going to settle with calling Australia’s tech industry as a whole as “Silicon Beach”.

Privacy – just like inflation

Privacy is a massive business issue. I’ve commented on the lack of interest in privacy from entrepreneurs in the web space; I’ve tried to define privacy; and I joined the APML workgroup for this reason

Need to know why I think it matters? Well here are three facts:

1) Targeted advertising is the future of advertising. Why? Because it’s most effective type of advertising.

2) Web services, and arguably the entire attention economy, rely on advertising as a revenue model.

3) There is a natural friction between targeted advertising and privacy. You can’t target without knowing who you are targeting – which implies some type of implicit collection of data.

Google, on the strength of its brand, has been able to manage the privacy issue. But no longer. Privacy International has ranked Google at the worst privacy offended on the internet. As 99% of Google’s revenue relies on advertising, with open acknowledgment that they are trying to find ways of better targeting advertising, we can expect to hear more and more how Google’s evil is in the data they collect and the way they control it.

Economic growth is one of the key concepts to how our world works – it’s what companies and countries for example, constantly aim for. But as we have seen repeatedly, if an economy grows too quickly, problems can appear – inflation, infrastructure issues, and fatigue. Greed has a price. In the context of an economy, inflation is the speed-hump – the faster you drive over it, the bigger the hit.

So would it be too far to extend the metaphor, to say that privacy is the advertising equivalent to inflation? If you are relying on advertising as a revenue model, remember that privacy will matter more and more with an interconnected world.

The attention economy needs a consistent base

Okay, enough naval gazing. The journalist in me (by experience), the accountant in me (by education), and the businessman in me (by occupation) is going to synthesise my understanding of the world and propose a new metric for the attention economy. I don’t know the answer yet, but I am going to use this blog to develop my thinking. I can’t promise a solution, however I am sure breaking the issue down into key requirements, assumptions, and needs of what this magical metric is – will add value somewhere for someone.

So let’s start with the most important assumption of all: what are we measuring? As Herbert Simon coined it, and smart guys like Umair, Scott and Chris have extended (at least for my conceptual understanding) – it is called the attention economy. It is important to note however, that the attention economy is an aspect of the Information Sector (see below). And as I described in a previous posting, the attention economy needs a metric for two reasons: monetisation and feedback.


What incorporates the attention economy?
Well, this is a bit like a related problem I had when I first came to grips with what new media was. A few years back, I did some active research trying to understand how a book, a television, a newspaper, and a search engine – could all somehow be classed as “media”. I found my question answered by Vin Crosbie’s manifesto (read this for a recent summary). Take note of what he considers is the key element of new media (the technology aspect).

I am going to propose one of my key assumptions of the future, which will answer this question. It might not happen for another 5, 10 or even 20 years – but I am convinced this is the future. The Internet will act as infrastructure.

I believe the unifying aspect, and the backbone of the attention economy, will be the Internet. All enterprise software, all consumer software, all (distributed) entertainment, all (distributed) communications and all information – will be delivered digitally over the Internet. I think the people at the US Census bureau?Ç? conceptually have already worked this out by defining the information sector of the economy, which classes the above mentioned and more into this one diverse category. The Internet is the enabler of the Information Age, just like how the production line was for the Industrial Age

I’m not saying we are going to live, sleep, and eat on computers in the future. However just think – anything that runs on electricity, can connect to the Internet. And look at the technologies being developed that enable the Internet to live beyond the computer screen like electronic paper and?Ç? dynamic interfaces. Even more powerfully, is that the Internet has brought entire industries to their knees – like the newspaper and music industries – because it is providing a more efficient way of delivering content. If it’s information, communication or entertainment related – then it probably works better in digital format, over the Internet. (Excluding of course the things like theme parks and the like, which are more about physical entertainment and not distributed entertainment like a television programme).

I think this is an important issue to be recognised, that the Internet will the the backbone of the attention economy. By being the core back-end, it means that no matter the output device – whether it is mobile phone, a computer, or a television – it will be providing a consistent delivery mechanism for digital information. For a measurement system to work, it needs to be consistent. The Internet infrastructure will be that consistency. If you can recognise that, then that is a big step forward to solving the issue.

Tangler

This is the second post in a series – wizards of oz – which is to highlight the innovation we have down under, and how the business community needs to wake up and realise the opportunities. I review Tangler, a Sydney-based start-up that has recently released their application to the world as a public beta.

Tangler is a web-service that enables discussions over a network. Think of discussions with the immediacy of Instant Messaging (it’s easy), but with the persistency of a forum (messages are permanently stored). Discussions are arranged into communities of interest (groups), which are further broken down into topic areas. Click here to see a video overview.

Value

1) It’s a network application. Although it’s got a great design, and looks like a funky website, the real power of this web service is what it’s working towards: discussions over a network. Imagine a little widget with the topic “What do you think of Elias Bizannes?” placed on my (external) personal blog, my internal work blog, my myspace/facebook/social networking page, as well as it’s own dedicated forum on the Tangler site. A centralised discussion, in a decentralised manner. That’s big.

2) It’s community has great DNA. Communities are not easy things to build – my own experience on a getting-bigger-by-the-day internal project has shown that it is a complex science, touching everything from understand motivational theory to encouraging the right kind of behaviours (policing without policing). My usage on the site has shown to me that the active community building currently occuring, is on the right track. Anyone can hire a code monkey, wack on some flashy front-end, and say they have a great product. But not anyone can build a strong community – even Google struggles on this (the acquisition of YouTube happened largely because of community, because the YouTube community beat Google’s own service). Tangler’s community is already turning into a powerful asset – the DNA is there – now it just needs exposure, and the law of cumulative advantage will kick in.

3) The founder and staff are responsive to its community. I posted a question on the feedback forum, to prove this point: I got a response in an hour, on a Saturday. The staff at Tangler are super responsive – which in part, is due to the real-time discussion ability of the software – but also because of their commitment. As I state above – the value of Tangler is the community of users it builds – this type of responsiveness is crucial to keep its users satisfied to come back, because it makes them feel valued. Additionally, the community is driving the evolution of the application, and that’s the most powerful way to create something (adapting to where there is a need by the people that use it)

4) It’s a platform. What makes Tangler powerful, is that it encourages discussions around niche content areas. Make that niche content, being created for free. Low cost to produce + highly targeted content = an advertisers dream. Link it with a distributed network across the entire Internet (see 1 above), and you’ve got something special.

Conclusion

Social networks, which is what Tangler is, are characterised by:
1) the existence of a repository of user-generated content and
2) the need of members to communicate.

Tangler’s user-generated content and communications web make them an interesting fit for both media conglomerates and telecommunication companies (but for different reasons). I see a Tangler acquisition as a no-brainer for the big Telco’s. Integrating a social network like Tangler into Telstra, builds on the synergy between the communication needs of social network users and the communications expertise and service infrastructure of the communication companies. Unlike voice calls that are a commodity now, the Telco’s need to take advantage of their network infrastructure and accommodate for text-based discussions, which can be monetised for as long as the content exists (with advertising).

The challenge for Tangler however – as with any other Internet property – is that the scale of the audience of social networks determines the nature of the relationship with a communications company. Micro-sized social networks are not interesting to communication companies. Massive social networks are, but history has shown they would rather be partners than be acquired. To be attractive to the big end of town, Tangler needs to show to have a scale large enough to grow as a business but not too large to dictate the terms of the business.

My observations conclude me to think that they will be a hit once they open up their application to external developers, which will relieve the development bottleneck faced by their resource and time constrained team. However they shouldn’t rush this, as I still think their performance issues are not completely ironed out yet. An open API would be taken up by its enthusiastic community who are technologically orientated. Not too mention the strong relationships the CEO and CMO have forged with the local web entrepreneurial and development community in Australia.

My boss is currently doing a secondment as acting Finance Director at Sensis, Telstra’s media arm. Maybe I need to organise a catch-up with him, before these guys get snatched up by some US conglomerate!