Deep Media

Ad Sense? Googlenomics and the Tyranny of Click-Through

The June issue of Wired has a provocative piece by my colleague Steven Levy on Googlenomics—that is, Google's extraordinary success at transforming the ad business from the martini-fueled ego bash portrayed in Mad Men to the highly automated, algorithmic exercise that is search advertising today. But the story only glancingly addresses the connection between Googlenomics and the overall state of online advertising, which is not healthy. Advertising, virtually all of it search-related, brought Google more than $21 billion in revenue last year, accounting for 97 percent of the company's gross income (and funding, among many other things, the phenomenal money pit that is YouTube). In the US, Google search advertising—almost all of it priced on a cost-per-click basis—accounted for close to 45 percent of the total Internet ad-revenue tally reported by the Interactive Advertising Bureau. 

The Google model assumes that if your ad isn’t clicked on, it’s worthless—and in the case of the short text ads Google places next to search results, that's pretty close to true. But what about everything else? Search-related advertising does little or nothing to build a brand, but online video and display ads are devalued because they don't generate comparable click-through rates. Web video accounted for just 3 percent of the money spent last year on online advertising, according to the IAB. There are a number of reasons, but the key one is this: Ad people tend to buy what they can measure. Yet for brand advertising, click-throughs offer a measure of engagement that's as seductive as it is meaningless. And as a result, brand advertising is languishing on the Web. 

Last week I had dinner with Mike Chapman, editor of AdWeek, and Dean Donaldson, strategy chief of the London-based ad technology firm Eyeblaster. Donaldson was touting a measure of engagement he calls dwell time—that is, how long users spend actively engaged with an online ad. "Actively engaged" can mean any number of things, from mousing over a banner to playing a video ad. It's not quite as cut-and-dried a measurement as click-through, but it gets a lot closer to the kind of user behavior that actually matters. Like whether or not anyone is paying attention. 

Consider the synched banner ads that Lee Clow and TBWA have been creating for Apple. I’m not likely to click on an Apple ad any time soon—I already have a MacBook and an AirPort and an iPhone and a couple of iPods and way more earbuds than I will ever have ears. But I’ve talked with countless people recently about how much fun the animated "Mac vs. PC" ads are—the ones that stage a dialogue with one another while your Web page loads. 

A brand is nothing more than a product with a story to tell, and like everyone else I respond, internally and perhaps immeasurably, to a brand that tells its story in an engaging way. Google has developed some super-duper algorithms, and it's easy to see why media buyers have become so enamored of them. But algorithms don't tell stories—at least, not to humans. "We've toiled under the tyranny of the click for too long," IAB chief Randall Rothenberg declared in a recent speech, taking his cue perhaps from Keanu Reeves in The Matrix. Apparently Google itself agrees: Earlier this month, AdWeek reported the company was about to launch a brand-awareness effort for Chrome, its new Web  browser. Online? Pay-per-click? No, actually, in a TV campaign—Google's first. 

TV Watch: Will Hulu Become a Victim of Its Own Success?

 

Hulu, the online TV service launched two years ago by Fox and NBC, has enjoyed incredible success with viewers — too much, it may turn out. 

Two weeks ago, comScore’s report that Hulu had pulled into the top three streaming-video sites was quickly followed by news that Disney — the corporate parent of ABC and ESPN—was taking a stake in the venture. But in the long run, those two milestones could be overshadowed by a seemingly much smaller bit of news: the decision in January to pull most episodes of It’s Always Sunny in Philadelphia from the site. 

Instead of carrying every episode of Sunny, a way off-center Danny DeVito comedy that languished on FX until Hulu users made it one of the site’s most popular programs, Hulu limited its offering to the five most recent shows. User reaction to the move was swift and predictable. “Well, off to the torrent sites,” one wrote on Hulu’s Sunny forum. “Hulu blows!” declared another. “Whose retarded idea was that?” 

Well, not Hulu’s. The move was taken at the network’s request. Powerful forces are working against free, legal online TV — and the decision to pull Sunny may have made that show the canary in the server farm. 

In theory, at least, the availability of such shows on Hulu threatens two of the key financial underpinnings of cable TV: DVD sales and carriage fees. Comcast and its brethren pay the cable networks to carry their programming, and the idea that Internet users can watch the same shows online for free is not popular in places like, well, Philadelphia — or at least that corner of it where Comcast is headquartered. Stock analysts aren’t exactly thrilled with the concept, either. 

Shortly after removing the Sunny episodes, Hulu took another unpopular step: It shut off access to its programming from Boxee, the fledgling service that enables you to stream online video to your TV set. In a blog posted titled “Doing Hard Things,” Hulu CEO Jason Kilar apologized to users. “Our content providers requested that we turn off access to our content via the Boxee product,” he wrote, “and we are respecting their wishes.” 

It’s not hard to see what’s at work here. If cable and satellite operators are threatened by your ability to watch free shows on your computer, imagine how they feel about letting you watch free shows on your TV. What if people decide they can do without those expensive bundles of programming? Of course, companies like Comcast and Time Warner Cable don’t even begin to replicate Hulu’s breadth — its readiness to stream every episode of every series it can get its hands on — or its ease of use. The BitTorrent sites aren’t exactly a breeze, but at least they let you get what you want. 

Kilar, a longtime Amazon exec, knows what the Internet is teaching audiences to expect: The ability to watch any show, day or night. And he’s adept at explaining this new reality in a way that emphasizes its potential. “This is a tectonic shift,” he told me last year, “and what it does is allow network heads to find the audience they always should have had but couldn’t reach.” But not everybody sees it that way. 

A story in yesterday’s Los Angeles Times sums up what he’s facing: Fear. It’s certainly understandable. Television networks, and the Hollywood studios that make programming for them, are experiencing declining ad sales, declining DVD sales, and rising panic. “We have to find ways to advance the business rather than cannibalize it,” said the distribution chief at Turner — a network that refuses to make shows like The Closer available on Hulu and keeps only a few episodes on its own site. 

That would be nice, but the problem is that if you don’t cannibalize yourself, somebody else will do it for you. “You can’t protect old business models artificially,” I was told by Peter Chernin, the outgoing president of Fox’s parent company, News Corporation. Television execs who doubt him might want to check with their friends in the newspaper industry. 

Or better yet, just look at the paper itself. The same startlingly thin issue of the LA Times that carried the Hulu story featured an article about Craigslist and its policies regarding classifieds, most of which are free. Not so long ago, classified ads were a dependable cash cow for the newspaper business. But yesterday’s Craigslist article was followed, in the print edition, by a mere three pages of classifieds, liberally padded by display ads for the Times itself, with another three pages lurking at the end of the sports section. This for a metropolitan area of nearly 13 million people. 

That guy on Hulu’s user forum who was turning to the Torrent sites? Kilar reads these forums all the time. The executives who control Hulu’s programming should do the same.

Cross-posted from Wired/Epicenter

Reinventing the Book, Take Three: the Anthony E. Zuiker Approach

Anthony E. Zuiker, creator of the phenomenally popular CSI franchise on TV, came to New York last week to unveil his latest concept: the digi-novel. The first title, due in stores Sept. 8, is Level 26: Dark Origins, a crime thriller that aims to do for serial killers what CSI did for forensics. "This is not your father's CSI," Zuiker remarked at a media lunch, promising something "too hot for television" - an in-your-face experience with a killer so dangerous he's literally off the charts. 

What separates Zuiker's digi-novel from the ordinary ana-novel, so to speak, is primarily two things: a series of three-minute videos meant to be watched between chapters, and a Web site (built by the team behind Lonelygirl15) that will enable readers to connect with each other and with the story. Looking for a thrill? Enter your phone number and maybe the killer will call you back. Or on a somewhat more prosaic level, offer your ideas and maybe see them incorporated into the plot of future stories in the series. 

The books are being published by Dutton, a Penguin imprint whose more conventional titles include John Hodgman's More Information than You Require and the erstwhile best-sellers of Ken Follett. Penguin has been doing some interesting things lately, though you wouldn't have known it from its disastrous "New Think for Old Publishers" panel at SXSW. Tops on the list is Penguin UK's "We Tell Stories," a retelling of six literary classics using such unconventional media as Google Maps. Created by Dan and Adrian Hon of Six to Start, the effort received two awards at SXSW. 

Zuiker's story for Dutton concerns a mysterious individual whose drive to murder is matched by his taste for latex. Encased in a full-body condom with nose and eye cutouts and a nasty-looking mouth zipper, the killer uses a glass cutter to enter people's homes, then hides himself away until ready to strike. (Your aunt with the weird compulsion to dash around looking under every bed as soon as she enters the house? Totally vindicated here.) Law-enforcement types, Zuiker reports, use a 25-level classification system to rank homicide perps, from a random guy who freaks out and stabs his wife (level 1) to your Charlie Manson-type hysteria-generating psychopath. This guy merits a rung of his own. 

At the lunch, which was attended by a dozen or so media professionals from the likes of People and BusinessWeek, Zuiker screened a couple of sample videos - "cyber bridges," in digi-book parlance. The segments feature veteran character actor Michael Ironside and 24 regular Glenn Moreshower; newcomer Daniel Buran stars as Steve Dark, a black-ops investigator controlled by the US government. They look like TV: CSI fans will not be disappointed in the production values, or in the suspense quotient. Nonetheless, the book is written so you don't need to watch them to follow the story; they're there, Zuiker said, "if you want to go to a deeper level of immersion." 

At the moment, the right technology platform for Zuiker's deep-media experience has yet to be built. If you're reading the book itself, you'll obviously need to go to your computer to watch the videos or engage on the Web site. E-books are no better, since neither the Sony Reader nor Amazon's Kindle is equipped to stream video or go online. But Zuiker figures the technology will catch up with him. "This is storytelling 2.0," he declared. "It's a 24-hour digital experience, not just a book on a shelf." Look for a public preview at Comic-Con.