The Future of Media

ML Jul 23, 2006

I’m sitting on the patio of a lakeside condo in Keystone Colorado, winding down from the Search Insider Summit, a marathon 4-day event hosted by MediaPost, consisting of morning sessions of expert speakers and panels, followed by horseback riding, golfing and rafting. On this trip, I’m also reading On The Edge, by Brian Bagnall, the story of the spectacular rise and fall of Commodore, typing this article on my laptop and am reflecting on the birth of the personal computer industry that took place only 30 years ago, and digesting it right along with everything I learned at the conference.

There is just far too much abundance of ideas running through my head for a well organized post. This will be a train-of-thought post, covering marketing topics from the conference, tech history from the book, and ideas gleaned from the synthesis of the two. Ultimately, this leads to my thoughts on the future of technology and media.

I am newly impressed in reading this book that I actually entered the crazy, historic world of Commodore at the tail end. Having worked for Commodore it turns out is an ultimate ice-breaker at events like Search Insider Summit. You would never guess it from the revisionist histories of the personal computer, but EVERYONE remembers Commodore, and most often with a fondness and spark of excitement that’s hardly associated anymore with today’s PCs. At events like this where I always look like the youngest one in the room, and someone nobody knows, because I haven’t been high profile, opening up with the fact that I worked for Commodore builds some instant rapport and interest. I figured that out at a mountaintop dinner on the first night of the Summit, which was held at a restaurant that you could only access by gondola. I mentioned to a few of the folks that inquired as to my background that I worked for Commodore, and faces lit up. Who would have imagined.

In addition to the positive Commodore nostalgia, I also realized almost hours before my panel discussion at the conference that this Commodore experience directly tied to the message I was there with. It turns out that I had a front-seat view of the ultimate crash-and-burn failure of pure word-of-mouth. Commodore, aside from the freak exceptions such as the William Shatner commercial, relied almost exclusively on word-of-mouth buzz to build it into a billion-dollar computer company. They expected all their advertising for free from their customers, but in the end, the center could not hold. It was fine so long as they constantly innovated and properly predicted the market. But as the industry matured, competition got fiercer and better at marketing, relying purely on the generosity of their customers was not enough.

By contrast, you have Google today, which is built completely on the force of word-of-mouth. But as Commodore learned, relying on getting all your marketing for free is not enough. And even though I was coming to the Search Insider Summit with a word-of-mouth, free publicity message, I wanted to make sure the audience knew I was not poo-poohing our highly represented counterparts who serviced the world of paid search, and the world of media buying and bid management. Instead, we were offering a tool equally valuable to marketer and SEM-firm alike. It is a new approach to natural search, but just one tool in the marketing ecosystem.

A recurring theme of the conference was how important natural search was, but that almost everyone in attendance serviced the pay-per-click segment, because that’s where the money is. It was not outright stated, but I always get the feeling it is also where the clarity is. Paid search has become a commodity, but one whose buying and selling is very complicated and tech-heavy. No matter how context and behaviorally targeted the delivery of your advertising message may be, you are still basically buying media, and it’s a clear deal. It’s close enough to traditional media buying that the SEM industry is able to be more formal and easier to engage in and do business with than natural search, where there is no such clarity.

Another interesting point that came up a few times at the conference is how paid search is often held to a higher accountability standard due to its inherent trackability, and how endeavors that should be treated as branding campaigns may end up being treated like direct response campaigns. Clients will readily pour a few million into TV and radio with almost no trackability, but cut back search budgets because conversion rates are too low–on campaigns whose success should not necessarily be measured by direct conversions. Similarly, if the site’s not ready, there’s no point in driving traffic to the site through search, because your ultimate selling tool is the site itself. Education is one of the most important aspects of search marketing.

The conference consisted of both some of the biggest online marketers in the world, and some of the most well-known search agencies, along with representatives from Microsoft, Google, Yahoo and Ask. One other major PR firm was represented, but as far as I could tell, we were the only one there with a pure natural search message. The importance of natural search was hit on right off the bat in the opening keynote speech by Chris Sherman who stated that paying top-priority to natural search will be one of the most important parts of online marketing, to the well-known Wall Street search analyst Jordan Rohan who called natural search traffic the most precious commodity on the Internet. Despite this, every reference to search marketing implied paid search. And the comment was later stated that none of us would be here had Google not turned it into a billion-dollar business. Natural search is acknowledged as king, but seldom dealt with head-on.

And that’s greatly due to the point I keep pounding on: the road to natural search is not a clear one. Even if the technical projects are clear, there are still many obstacles to doing well in natural search, sometimes insurmountable obstacles that have more to do with politics than technology. I had my session which discussed these issues, and we laid out how tackling natural search is much easier when you start with long tail keywords, and how HitTail filled in the most difficult missing piece: knowing where to begin. The message was very well received by the relatively small group in attendance, as it was a break-out session, but I think we’re starting to get some folks in mainstream marketing recognizing this new approach. We even have had very positive response from SEM firms recognizing the value of another, differentiated list of keywords with which to seed campaigns.

We were thankful to David Berkowitz who recognized our HitTail fanny pack sponsorship bags as the best swag of the conference, and well-branded for a beta product. This was against some heavy competition–a beautiful poker chip set that was literally heavy. We thought hard about how to sponsor an event in a Colorado resort where we would be promoting a natural search product by morning, and golfing, horseback riding and white water rafting by afternoon. It seemed only natural that we did a fanny pack to hold your cell-phone, glasses, or whatever. Plus, we stuffed it full of all-natural goodness like trail-mix, granola bars and all-natural mints. Several people came up to me and commented on how welcome it was, for both the emergency rations and usefulness. That’s the kind of strategic thinking you get with a PR firm.

Speaking of PR firms, advertising and PR agencies were sometimes referred to as not getting it. One of the other online marketing firms there joked that you should go ahead and ask a traditional agency about SEO and see the kind of understanding they have. I bit my tongue, but couldn’t resist chiming in to agree to another point he made, being sure to label myself as part of a PR firm that gets it. The general perception seems to be that if a PR firm is doing anything with online marketing, it’s “the buzz thing” which is exactly how our breakout track was positioned, by an SEM co-sponsor who was moderating the event. I was compelled to get up on the microphone and re-position the session as going after, as Jordan called it, “the most precious of commodities on the Internet, natural traffic”. Attendance, while a small group, turned out to be enough to get the word going. This was the first public announcement of the HitTail application, beyond the soft launching of the beta.

We further sponsored a raffle, where each HitTail fanny pack contained a postcard of Summit County, with a keyword printed on the back. We then drew from a bag a list of keywords. A match was found on the first drawing, and Dan Tieu of Hotwire won the Canon PowerShot SD700 digital camera. That happened on the first day, just before the break for lunch.

The Search Insider Summit was particularly interesting, because of the participation of the marketers–or you might say the end customers or clients. There was a question and answer/critique session where two major companies actually came to the stage to have their online marketing campaigns critiqued. One of them was already deeply into online marketing, while the other was only getting into online marketing, but already controlled a seasonally heavy-traffic Web destination site. Together, they represented the travel and financial services space–talk about competitive online marketing space, and ideal candidates for the session.

Of all the speakers and panelists, the perspective that was most new to me was Jordan Rohan’s, the analyst. He made some interesting predictions and assertions. One of his assertions was just how important international online marketing actually is. With all the talk of behavioral targeting and incremental traffic building in US-centric campaigns, its nothing compared to the size of business internationally. He had many slides with financial breakdowns, but a point that he hit home was just how influential Google really is. Adding together the market capitalization of all of Google’s competitors together doesn’t equal Googles’. Google is the undisputed center of the Internet universe right now. It’s doing that much better than everyone else, and in many cases equally well on an international basis, such as England and Germany. Twice, Jordan referred to natural traffic as the most precious commodity on the Internet, which I view as curious because most of the money going into fixing natural search (I believe) not going into the type of public companies that would be on his radar. Mostly only paid search revenue can make Wall Street take notice. Unlocking natural search is simultaneously the top priority and lest visible type of search business.

HitTail fills the missing piece so well, that it’s really just a matter of people getting it on a broader basis before it takes off like wildfire. Its one of those classic situations of leading the market, and doing something that no one quite understands‚Ķ today. But stay the course! In time, it will become commonsense, and no one will understand how anyone didn’t get it.

And that brings us back to the Commodore book. The birth of the PC industry is just rife with these stories. Jack Tramiel and Irving Gould could have been the two richest men in the world, instead of Bill Gates. They actually were in the position to grab the brass ring several times, and chose to pass on the opportunity each time. Had Irving not starved Jack for resources, and Jack not undermined his people, then Apple would never have happened, and Commodore would be bigger and scarier than Microsoft’s monopoly today. Commodore was first, cheaper or smarter in just about everything, but they still lost because of a series of shortsightedness or lack of vision.

We are again at that one of those sorts of apex moments as occurred in the birth of the PC industry, but this time in marketing and media. Old media is like the big old mainframes. Quirky Internet-capable devices of today are like the first PCs. Human attention is a finite resource. Less of that attention is going to traditional media like print and TV with every passing month. More of it is shifting to online venues. There are 2 internet enabled mobile phones to every 1 PC. By 2010, it is projected that there will be 10 Internet-enabled mobile devices to every 1 PC. By that time, the next generation IPv6 Internet will have arrived, and the efficient means of “broadcasting” that was limited to TV and cable will be brought to the Internet at large, and the lines between traditional and online media will be further blurred. The revolution of low-power paper-like electronic display technology like the eInk display in Sony’s new eBook will be common, and probably be plastered up like wallpaper. This is how media and media-devices will evolve just as the PC industry did.

That Media Lab inspired $100 laptop should be down to $50 by that time, functionally making PCs free. Ad hoc Internet meshes will provide alternatives to paying internet service providers, and additional completely alternative Internets will be available for the price of watching a few ads. Every publisher no matter how tiny will be able to get their message out and reach their perfectly matched audience through increasingly improved search. That finite resource of human attention will be increasingly fragmented over different media publications. The concept of differentiating between online and offline will go away. All media will effectively be online, and we will look at TV and print media the way we look at calculators and paper legers. They have their use and are not going away. But they’ll be totally eclipsed by the new devices.

And the way for marketers to reach their audience will be as dynamic and changing as media and devices themselves. Push-ads will become increasingly behaviorally targeted to achieve that ultimate goal of the exact right message at the exact right time. If the sensor in your phone detects bad breath, an ad for mouthwash will pop up, with GPS instructions on where to walk and get it, at which time they will attempt to upsell you at the point of purchase, and you’ll pay with your phone instead of your credit card, thus completing advertisers’ ultimate wet dream.

But that other side of marketing will still exist, where a question pops into your head, and you need it answered. So, you type or speak a few words, and instead of push-ads, it’s a pull-process. And it will always be a more welcome and less intrusive process than push-ads. In fact, it may be the only way to reach consumers who value privacy, opt-out or otherwise resist profiling. You get ads because you asked for them. And you MUST get ads with your results, because that’s what pays for the service. But in spirit, you’ve asked for more than just ads. You asked for an unbiased editorial opinion on what the best possible answer to your query is. And the results can’t just be whored ads, or else all trust is broken. The search companies of tomorrow will have to have to be a synthesis of Consumer Reports and The Yellow Pages to maintain credibility, trust, and therefore users.

Providing the device for free will be a powerful reason to change the ad/editorial ratio or perhaps even the ad/editorial division. Advertorials and Infomercials are the traditional media’s equivalent of Yahoo’s paid inclusion program. So far, the church and state division in search has been a clear line of demarcation, with only a few exceptions. GoTo.com and then Overture used to mix paid search in with the results that were fed to the then-mega-popular meta searchers. When Yahoo bought Overture and Inktomi, the paid search became marginalized text ads, similar to Google’s AdWords. Yahoo allows results to be algorithmically included through XML data feeds, helping sites that would be otherwise invisible to search stand a chance without redoing their IT infrastructure. Is that compromised search results? Probably not, but it’s not a black and white issue, either.

But back to the free device issue again. The cost of the end-device will effectively drop to nothing, and the price of bandwidth will be reduced. Advertising will be able to generate enough money to offset most of the cost, so the new media companies like Yahoo and Google have the option of relatively easily becoming an advertising supplemented technology platform, taking Microsoft completely out of the picture. It will be cheaper and more environmentally friendly distribute these devices rather than phonebooks.

These devices or their counterparts will also be the way individuals connect with each other, so right as the power of advertising increases 10-fold, so does the power of word-of-mouth. It will be easier to shine the light on evils committed in the name of industry and profit. The plight of the little guy, and the injustices that plague our world will be laid bare. Millions of micro transactions per second can occur as a result of these viral epidemic word of mouth outbreaks, and may be ultimately more effective than anything advertising can buy. Therefore, the balance between the world of media buying, a.k.a. advertising, and the world of word-of-mouth, a.k.a. public relations will continue to exist.

2 comments
  1. amckinnis

    Wow — no comments!! I’m pleased to be the first….there are times I really miss living in Colorado and have lots of fond memories of Keystone/Summit County. BTW, I am currently listening to KBCO (out of Boulder) — ain’t the internet great!!

    Congrats on the best SWAG award, it’s hard to get noticed and although I like tshirts, with any give-a-way there seems to be more activity at your booth because of it rather than what you are “demoing”.

    One week on Hittail – and slowing building the “list” – great product and interesting to watch the activity.

  2. rohit

    Mike – thanks for the summary, I’m guessing I’m the one from the “major PR firm” that you mentioned … it was great to meet you there and hear all the perspectives. I have to say, the fanny pack was a great idea, and I took it to its limits mountain biking down a trail at keystone in the pouring rain. It held up admirably.

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