Only 3 weeks away from The World Cup and the excitement inside my brain is building. If you’re not feeling it, watch the following video which is Nike’s three-minute World Cup short film which follows a match featuring the brand’s top footballers and shows how one play can lead to a future of success or failure.
The video, called “Write the Future,” premieres on TV in 32 countries during the UEFA Champions League final on Saturday, but was posted early by Nike on NikeFootball.com. The ad features Cristiano Ronaldo, Didier Drogba, Wayne Rooney, Landon Donovan, Thiago Silva and Ronaldinho (even though he didn’t make Brazil’s World Cup roster), plus cameos by Roger Federer, Kobe Bryant and Homer Simpson.
Alejandro González Iñárritu directed the Nike short and cast his “Amores perros” star Gael García Bernal as Ronaldo. Incredible work overall by the swoosh.
In case that video didn’t get you excited, here’s another short little commercial:
There’s an intersting advertising network that i learned about at SXSW this week called The Deck. They do one thing differently and it substantially impacts everything else: they get rid of the CPM. Selling ads by the 1000 holdover from the days of print media and TV where companies wanted to align ads to circulation and ratings. Deck does things differenly.
If you look at the three constituents of ad sales: publishers (the web site), readers, and the advertisers. The CPM is beneficial only to the advertiser. With CPM, publishers optimize their site for page views. This results in chopping stories into 3 pages, making photo galleries, lack of ajax, or other gimicks that result in more page views at the expense of user enjoyment. Typically when sites begin to focus on monetizing, they get worse for the reader, not better.
The Deck is an ad network. They represent both publishers (Twitteriffic, Daring Fireball, etc.) and advertisers (Rackspace, Gowalla, KickApps, etc.). They subjectively vet both of them. The also have the following rules:
They will only represent websites of a certain type. In this case it’s sites focused on design or technology
They will only place ads of products they like or endorse
They then will place only one ad per page of one size and of one format. They charge the advertiser a monthly rate and sign yearly contracts wht the publishers.
Their ads have up to 80 characters and one image
Does it work? Definitely. They are way oversubscribed for both advertisers and publishers. Even though advertisers get less impressions, they are more effective. Thus, 7 out of 10 advertisers return month after month. Publishers have more attractive, less cluttered sites and no longer have to worry about chasing pages. Sure they want an audience and the bigger the better but whether it’s 3 page views per user or 10, it doesn’t matter
The author of Daring Fireball has a story of when he was using Google Ads instead of Deck. For a while his most successful, in revenue terms, article was one where he compared a certain design to a man’s toupee. What he found was all the Google Ads next to his article had to do with men’s hairpieces. He also found that men’s hairpiece keywords are very highly priced and he earned 7x the amount of money on that page than other pages. This was troubling for him because he then started thinking about what words are valuable to Google when writing articles rather than what he readers want. His revenue (and interests) were properly aligned with advertisers nor readers.
Deck is an interesting example of someone innovating around ad networks. I find it fascinating as i really don’t like the CPM either. But, does it scale to other, non design/technology sectors? Maybe. I think it requires the readers to be intelligent and (somewhat)affluent. So i could see Travel or Cars having a similar ad network. But it gets harder after that.
I don’t know who is running the marketing department over at Old Spice or what ad agency they are using, but someone needs to get a raise because they have been knocking it out of the park for the past year or two. One of my favorite ads last year was an Old Spice ad featuring Bruce Campbell. He just keeps on walking, describing the je ne sais quoi of Old Spice and showing us the biggest sailing painting in history….
This year they’ve hit gold again with this ad. Look at the ad, now back at the blog, now back at the ad…:
What do you think? Any other ads that you like better?
Was watching this video today (below) with the Twitter COO. When asked about the advertising strategy, he says:
You will see an advertising strategy from us in the very near future. And i think that it will be…um…fascinating and completely non-traditional and people will love it…. The genuis of Google when Google first rolled out ads was that the ads were also the kinds of things that people were looking for. So we want to do something that is organic and in the flow of the way people already use twitter and not here are the tweets and here are the ads. So it’ll be very organic. It’ll be very cool and people will love it when they see it.
This is exactly the right strategy. I know from experience as does anyone who’s every tried to sell traffic to ad agencies that the banners are not working. The click-throughs and engagements are low. The IAB unit needs some help and the best way to help is to generate ads organically within the content. What Twitter’s strategy is, i’m not sure but i did see this video today where Steven Fry suggested that tweeters can sell access to their accounts. That would be interesting.
Here’s Twitter COO below. The ad discussion is at 17 minute mark
Just was reading about Google Maps, specifically their turn-by-turn, and its impact on the maps market.
As many people know, there are 2 main players in the map market: Tele Atlas and NavTeq. Google licensed both of them for Google Maps for years. While they licensed, they also sent cars all around the nation gathering their own data. These two guys, Tele Atlas and NavTeq, were the only game in town. TomTom, the leading portable GPS device maker, wanted to control their own destiny and agreed to buy Tele Atlas for US$2.7 billion. And Nokia, worried that they would lose access to the coveted map agreed to buy NavTeq for a cool $8.1 billion.
All was good until Google dropped a bomb. About six weeks ago, they went independent and didn’t rely on either for their map data. And then about a month ago they announced their own turn-by-turn navigation would be available in the Android OS. Now anybody from BMW to GM to Samsung can provide turn-by-turn by simply using Google’s OS.
The big losers here are RIM and iPhone. They either have to not allow that access or pay a large royalty. And Windows Mobile and Symbian are in an even more difficult situation as paying to embed this data could be more than the license fee they get from handset manufacturers. This all assumes, of course, that users really demand this feature. If they do, Google’s really in the catbird seat.
People will complain that this is incredibly anti-competitive. That Google is using it’s money making machine to unfairly compete in the map market. Well, the story is even worse than that. To get carriers to use Android, Google offers a cut on the search revenue that the phones produce. So not only is Android free but it’s actually paying providers to use it. Some people are calling it “less than free.” Google will go beyond cell phones with this strategy. Any netbook manufacturer (Dell, Sony, etc.) will get a cut of search revenue by building on Android or Chrome instead of Windows or Linux. It’s tough to compete with “less than free.”
It makes you think of the world of complements. Chris Dixon discusses Google and how its complement are the web browser and the OS. The best thing you can do as a company is drive your complements to become commodities. Well there’s no better way than driving their prices to be below zero. Kudos Google, I’m impressed.
There’s a good article about digital advertising and Nike and how they are approaching the shifting landscape. Some key points to the article:
TV and traditional ad spending for Nike is down 80% over the past 4 years where as digital spend is up 200%. They want to go where the consumers are and more and more that is online
Nike Marketing Director Simon Pestridge says: “We don’t do advertising any more. We just do cool stuff. It sounds a bit wanky, but that’s just the way it is. Advertising is all about achieving awareness, and we no longer need awareness. We need to become part of people’s lives and digital allows us to do that.”
For brands there’s a fundamental need to engage consumers rather than bombard them with ads
Another good point in the article is that the days of interrupt-driven advertising is over. The article claims, “Pestridge insists there will always be a place for traditional advertising, he acknowledges that the days of ‘interruptive marketing’ are over. ‘Now it’s all about deciding what you want to say and how you’re going to say it.'” In my opinion, sites that integrate a sponsors message into the content, whether paid or facilitated, is much more effective
They spend more time making content that they put on the web than making taglines. Content like Ronaldinho ‘Touch of Gold’ viral video has over 30 million views (see below)
I think this shows that the content is the ad now. Advertisers increasingly don’t want to interrupt the user. They don’t want to just inform – they want the user to engage with them. This is the where the future is. It’s not in banners, but rather in, as Nike says, “cool stuff.”
The guy is taking a love of The Big Lebowski a bit too far. Although i love the film – it’s in my top 10 of all time favorite movies – i think this is a bit much. Now if only i could meet someone who’s channeling Walter
As everyone talks about the death of newspapers, i’d like to remark on one of the majors elements in this death spiral: Craigslist. To me the two major killers of the newspaper are:
Decrease of authority & differentiation
Lack of classified revenue
First, the decrease in authority and differentiation. Every web site and publication needs to be an authority on something, anything. Newspapers in the past were authorities for:
Over the past 8 years, they have no become the authority for only one of those: local news. International news is dominated by CNN, Reuters and others who focus explicitly on that area. Similarly, sports is dominated by ESPN and Fox News and Entertainment has a variety of outlets that provide much more in depth coverage and reviews than newspapers ever did. This decrease in authority minimizes the importance of newspapers to readers. For most categories listed above, it’s a nice piece of reading material to have but by no means necessary.
The second piece is Craigslist. In 2000, newspapers pulled in $20 billion in revenue from classifieds. That went to $10 billion in 2008. So, in 8 years revenues for newspapers got chopped in half (stats here). Where did this money go, most of those services are now free on Craigslist. Craigslist took $10 billion out of the industry and pocketed about $100 million of it. To be exact, Craigslist is pulled in $80 million as of April ’08 (stats). Who knows what that will be for 2009 but prob at or around $100k. With a staff of 28 people so that’s pretty damn good.
Imagine that, a staff of 28 people is decimating an entire industry. That is the true power of the internet.
There’s a growing trend in the media to attack facebook. It started when their redesign got pretty bad reviews, continued when their CFO left, and now is gaining steam as mainstream outlets are questioning it’s core business proposition. There are three different things here and the media is pointing to them as an indication of Facebook‘s failure. I disagree. Here’s why:
Product enhancements. One thing i’ve admired about Facebook is their ability to keep pushing their product forward. They introduced a great photo experience before any of their competitors (and have grown to be #1 on the web). Even as they were experience phenomenal growth (they hit 8 million student readers), they completely redid their home page when they introduced the News Feed. While initially hated by their users (FB blog) and the media (Time article), it set the standard for how social networks should display user activity and is now seen as a stroke of genius. And growth climbed even higher. At 70 million users they then completely redid the profile page to be a feed-based page as this is the best way for users to continuously portray themselves (see Tumblr for an example). This was hated at first too. Now, they redone the Facebook Home page to better showcase conversations and user activity. Is it like Twitter? Yes. Is it hated by their users? Yes. But it is also an improvement. More than any other company i know of, Facebook is constantly pushing to get better in all areas and doing it fearlessly. Even if they misstep, I applaud them for it. From my experience at AOL i’ve seen that when yoy have a large user base it’s very easy to become tentative and second-guess every move. Not changing becomes the easiest path. It also means you start dying. This latest change is more an indication that they’re not dying but moving forward.
Valuation. Facebook got an absurd $15 billion valuation from Microsoft when it sold them some equity. That deal was more than just equity sales but it also solidified Microsoft’s relationship with them as their exclusive third-party ad provider (story). That valuation has become a problem as every new raise that happens in the industry (Twitter, FriendFeed) is evaluated against it. Facebook is now raising at a more reasonable level at a $5 billion valuation. I don’t think this is an indication of failure of FB but rather a reflection (a) that these raises are straight equity and not part of an ad sales agreement, and (b) the market is the worst it’s ever been. I think it’s ridiculous to think that the environment is the same as it was in October 2007.
Business Model. The media talks about Facebook’s failure to make an ad business out of their inventory. Time’s article this past week was called, “Facebook Takes a Dive: Why Social Networks Are Bad Businesses.” This is completely ridiculous. First of all, MySpace is making money. Let me repeat. MySpace is making money. They were bought by Fox for $580 million and they then immediately did a deal with Google to sell ads on their search page from 2006 to 2010 for $900 million dollars (details here). That’s a quick profit of $320 million. Everything else on top of that year-in and year-out seems to be gravy. The article in Time continues to say:
What is true is that social network sites have had trouble making money. MySpace was supposed to be a big part of the revenue growth at News Corp. Wall St. thought Murdoch was a genius to buy it. Last year, News Corp had to admit that MySpace would not hit its revenue targets. That is usually not the hallmark of a property that is going to take over the Internet. Analysts believe that MySpace rival Facebook had revenue of $265 million last year. That is astonishingly low for a company that had 57 million unique visitors in the U.S. last month. And, Facebook also has a very large international user base.
So let me get this straight, even though MySpace is profitable at $500-800 million dollars a year in revenues and even though it’s generated hundreds of millions of dollars for News Corp it’s a bad business becuase they missed their revenue target last year? That is completely ridiculous. Facebook is a differnt issue. They have repeatedly said that they are deprioritizing ad revenue and instead focusing on growth and user engagement. Since they started saying this (starting in late 2007), they have grown from 50 to 200 million users. I’d say that’s pretty good execution. Facebook makes about $275 million a year. Could they make another 100-200 million if they started selling more ads on search pages and profile pages? Absolutely.
All of these reasons above are why sensationalist articles discussing the demise of the social network drive me nuts. Nobody knows what the future holds, but one thing that we can pretty much be sure of is that sites that have great user engagement and activity – and facebook has over 20 million users update their status at least once a day – will get the ad dollars. Nick O’Neil has a good post on AllFacebook today on why he’s willing to pay a $34 CPM on facebook. It’s not the silver bullet but it shows that there is a profitable end in sight for the company and it’s not necessarily the horrible business the media would like it to be.
They should draw an equation: What level of fame do you need to achieve to keep doing what you want? Because you don’t want any more than that.
if you get too famous, you have people wanting to take a picture of your butt on the beach.
These are quotes i read from Grant’s blog and this blog post which discusses that being big enough to do something interesting without burdening yourself is what’s hot right now…
In the 1950s, it was one size fit all: gigantic or nothing at all. We wanted groaning buffet tables. We celebrated the “good life:” by consuming heroic quantities of sugar, salt, fat, nicotine, alcohol and sun (and as much carbon as possible). We wanted cars the size of a 1958 Cadillac, block long conveyances, fins and all. We wanted more shoes the Imelda Marcos. We wanted homes the size of a small town.
The world used a Denny’s model: all-you-eat plus 3000 calories more. “No one leaves this place with an empty plate.” A Martian would wonder at this. Denny’s had given us more food than we could possibly eat. Food was being wasted.
We are hearing a “just enough” sentiment more and more. It’s as if we are as a culture working on a new definition of what’s enough.
You see it with the Green movement and in music. It’s not all about being The Beatles. This makes complete sense to me. As they say in Batman Begins, “with great power comes great responsibility.” And responsibility is exhausting if you’re a celebrity, sports hero or when you’re running your own business.
In the case of an entrepreneur, “just enough” is about control. Staying small(ish), staying private, supplying your own capital, all these mean calling your own shots. Venture capitalists and Wall Street can drive someone else crazy. The just enough entrepreneur can take his or her own chances. When it comes time to choose between interesting and profitable, you can go with interesting. Just enough in this case is about control.
One problem i see with this model is that if you don’t achieve some scale or critical mass you won’t be successful. As the world becomes advertising-based, this means the person with the most engagement, page-views, etc is the one that gets the business and can continue to operate and innovate. The smaller guy doesn’t get the PR and mindshare and thus loses the users to the bigger guy. For web applications dependent on ads, can they survive in a long-tail world?
For bands does this work – can you be a medium-sized “just enough” band and still pay the bills? Ani Difranco, Clap Your Hands, and Tori Amos would say so.