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Facebook, GM and the State of Social Advertising

I sat down with Digiday’s Brian Morrissey on Tuesday to talk about social advertising, native creative formats, the GM-Facebook dustup, and the future of advertising around images. Excerpts below. Full story here.

Brian: GM is pulling its Facebook ad budget because it says advertising there doesn’t work. What do you think?

Chas: That’s a preposterous claim. I can’t imagine the first year that GM was buying TV commercials it was able to ascertain what was working and what wasn’t. It’s taken a generation to perfect and understand how to measure success in TV. For it to do that after three years seems premature to say it works or doesn’t work as a global statement. Facebook as a consumer experience and an advertising platform are both relatively new.

Brian: Why do you think images need a native format?

Chas: Right now… everyone is getting hip to images in a bigger way. Publishers are coming clean and saying 60 percent of their page views are image galleries. We’re seeing that in the growth of Pinterest and the acquisition of Instagram. It’s giving everyone permission to say images matter. There are a variety of companies saying images are yet another piece of real estate we can slap ads on…. There’s no content, just ads. We [at Luminate] are trying to do something different. If we can create applications that augment the image experience with content and services, then publishers and users will like the experience, and then we can think of the ad experience that’s native to that experience.

Federated Media’s CM Summit 2012: ChasNote Round Up

Battelle kicked off the annual Conversational Marketing Summit by interviewing Barry Diller, who delighted the CM Summit’s digital-evangelist crowd with remarks such as “magazines like Newsweek won’t survive another five years as print publications.” Then he summed up the divide between the big media companies and Silicon Valley as follows: “Talking to a TV network exec about tech is like talking to a plumber about bio-physics.” But tech adoption aside, he said, the cable and broadcast networks beat the pants off the internet when it comes to reliably delivering high-quality content, which is one of the chief reasons that advertisers love to spend on TV.

FM’s Joe Frydl presented the Law of Content on the Web: “The value of content on web is directly proportional to number of connections is starts or sustains.” Where digital marketing goes wrong, he said, is that — for all the targeting tools — it doesn’t understand context, and as a result it’s “tone deaf.”

LUMA Partners’s Terence Kawaja blinded the audience with a handful of new LUMAScapes, those logo mosaics that show the complicated ecosystem of startups, agencies, networks and exchanges all fighting for parts of the digital advertising dollar, and proposed a standard OS for online advertising. From Ki Mae Heussner’s post on GigaOM:

While the industry wouldn’t want to quash the innovation, he floated the idea of addressing what he called the ‘rationalization’ issue through standardization. Just like mobile technology has its Android and iOS platforms, Kawaja said, digital advertising could have its own operating system. “Many other industries have benefited greatly by having an operating system, a common platform upon which other companies can build their tools,” he said.

Everyone loves an easy-to-use platform, it seems. By 2015, he forecast, ads bought via real-time bidding platforms (RTB) will represent 25% of all online display spending.

“Too many brands still think writing a big check to Facebook means you have a social strategy,” quipped Mediavest digital chief Amanda Richmond. Meanwhile, on Tuesday, news broke that one of her agency’s biggest clients, GM, has canceled its $10 million ad contract with Facebook, three days before the social network’s IPO. The big-check-to-Facebook strategy isn’t working for GM, apparently. (To which I say, that’s preposterous.)

The industry loves data (“consumer insights are the new black,” she said), and the ability to precisely target consumers based on that data. But while we’ve become good at precision ad delivery, “we also need to know what story to tell them.” We’re falling short on the creative side. (Related: Digiday polls some industry folks, including me, to ruminate on the flaws and virtues of the banner ad.)

And then from Luminate’s Bob Lisbonne (my boss): Welcome to the Imagesphere. In the Kodak Era we took pictures on birthdays and vacations. Now, with a camera in nearly everyone’s pocket there is a whole new dynamic around image content. Ten percent of the photos every taken by humankind were taken in the past 12 months (1000Memories). That’s Phase I of the Kodak-to-Imagephere migration: A massive increase on photo creation. Phase II: New platforms for sharing those images (especially Facebook, Instagram and Tumblr) have turned photos into the universal language for communicating in social media. What’s next? Phase III, Bob argued, will turn those static images into interactive experiences. The popularity of Pinterest, from anonymity to the third largest social network in a few short months, is one example. Luminate’s image apps, which are used by more than 100 million consumers, are another.

Sarah Bernard, social media director for the White House, seemed to support Bob’s theory that images are where it’s at. When asked what she’s learned from using social media for direct democracy, she joked that the best way to engage the citizenry about tax code would be to sneak in some fiscal policy on a photoblog dedicated to Bo the dog.

A few more of my favorite soundbites:

Google’s Top Search Advertisers

The biggest chunk of Google’s revenue, search advertising, continues to be dominated by the titans of direct response: Wireless carriers, ecommerce sites, travel and financial services. IAC (Ask.com, Match.com, Citysearch, etc) was the #1 search buyer in the first 9 months of 2011. Microsoft, General Motors, Avis and Enterprise also make the top 20.

Kantar Media data as reported on Ad Age. Above chart from Business Insider.

Federated Media’s CM Summit 2011: ChasNote Round Up

My favorite stats, quotes and comments from this year’s Conversational Marketing Summit.

Starcom Mediavest Group CEO Laura Desmond talked of the migration of ad dollars from analog to digital media. Two years ago her clients spent 85% of their budgets on traditional outlets, 15% digital. Now digital’s share of investment is twice that.

Digital makes us realize brand and DR aren't distinct silos

She also wants to pull the plug on market mix modeling. As audiences began to spend more time with digital media at the expense of traditional, analog content, the modeling tools overlooked the change, which slowed the migration of ad dollars to digital. On winning the Microsoft business: Our companies shared a strategic view that Microsoft must pivot from being a “marketer of ads to a marketer of experiences.”

American Express VP for Business Apps Management Robert Ciccone shared research showing that 44% of small businesses are using social media to acquire new customers. Given how many SMBs depend on local customers, I was surprised that only 2% say they’re using Foursquare.

Tumblr founder David Karp shared his company’s very impressive numbers. Last year the site did 250 million pageviews, now they’re doing that many each day. The marketer case studies didn’t knock my socks off — they’ve got some work to do here.

Tumblr audience traffic stats

Founder and CEO of GetJar Ilja Laurs says the app industry will be as large as the entire music industry in 3 years.

App industry will be as large as music industry in 3 years

Twitter CRO Adam Bain announced that Twitter will launch its self-service ad-buying platform this year. They’re hoping that will grow their roster of advertisers from the 600 they have today to Facebook or Google levels. Sounds like brands are ready and willing:

CMOs ask How Twitter not Why Twitter

Blackberry’s had a rough patch in recent years, but VP Brian Wallace shared impressive numbers on their social media performance: They have 15 million fans in Facebook, who are collectively connected to 400 million of Facebook’s 600 million members.

Yahoo’s Chief Product Officer Blake Irving demo’d Livestand. It’s a new model in which publishers need to think like digital marketers, he said.

Some other quotes I enjoyed:

Color CEO

Shlain on digital shabat

Will.i.am on Obama

Only losers will pay for sex or advertising

Google's Biggest Advertisers in June 2010 (And What They Tell Us About Online Media)

Top 10 Google Advertisers June 2010

Hats off to Michael Learmonth at Ad Age for getting his hands on this sensitive document!

“While the search-spending document obtained by Advertising Age is not a complete list of advertisers on Google, the accuracy of its data was verified by multiple sources with direct knowledge of spending levels. It’s a revealing cross-section of Google’s business that gives some clarity to one of the most opaque areas of ad spending, and the lifeblood of many American businesses. “

Two noteworthy items in this story.

One, Google’s revenues are well distributed: Its top 10 advertisers (in June, anyway) represent only 5% of its total revenue. While 47 advertisers spent more than $1 million in the month, another 71 spent between $500,000 and $1 million, and other 357 spent between $100,000 and $500,000.

Two, Google’s revenues — which represents around half of all online ad spending — continue to skew heavily toward direct-response advertising versus brand advertising. Google’s top 10 includes University of Phoenix parent Apollo Group, Expedia, Amazon, eBay, Hotels.com and Living Social. Compare that to the list of top 10 US advertising spenders across all media:

Top 10 Advertisers Across All Media

Outside of AT&T, they are entirely different lists. At this point in the history of the Internet, it’s hard to argue that the big brands haven’t yet gotten hip to the crazy new technology. The only reasonable explanation is this: The giants of ad-supported online media — portals, publishers and social media platforms — are not offering solutions that do the stuff of brand marketing. Nobody beats search and behavioral targeting when it comes to serving up a coupon when we’re hunting for a product. But clearly the big spenders on the brand side aren’t convinced online ads can turn us on to a new shampoo or shaver, or convince us to walk into a dealership when our old car is still running fine.

Cast-Iron Advertising for Buick (1950s)

Buick Ads on Newspaper Paper Weights

Back in the 1950s, Buick turned cast-iron newspaper paperweights into ads. I have no idea how many cars these ad-weights sold (I bet Buick brand managers in the 1950s didn’t either), but — man — wouldn’t it be great to have one of these holding down stray papers on your desk right now??

More old newspaper paper weights at NYT.

Car Czar Will Control $7.3 Billion Ad Budget

From Ad Age:

“The world’s most powerful marketing executive is now the car czar…. Based on Advertising Age’s estimates of spending by General Motors Corp., Chrysler and Ford Motor Co., that would give the as-yet-unnamed car czar control over some $7.3 billion in marketing spending in the U.S. alone.”

Now there’s a guy I’d like to meet!

Bail Out GM, For the Sake of the Internet

GM’s CEO told congress last week that among the bad business practices his company will change, if taxpayers cut the requested check, is an advertising mix that is out of synch with where GM customers spend their time. From a reader comment on Fred Wilson’s AVC:

“When quarried about their 09 expenditures Wagganer very specifically stated ‘We will move a SUBSTANTIAL portion of our ($500 million) advertising budget to online (Internet).’

Previously I was among the bail-out skeptics, but I’m warming up to the idea!

NY Times Gets Hip to Conversational Marketing

Chevy NYT Welcome Page

The New York Times has launched a sponsored content section in partnership with Chevy that brings together editorial stories from the Times archive featuring GM, Chevy, fuel cell and hybrid vehicles.

I love it. How could I not? It’s a full sibling of The Best of the Green Web site FM launched in partnership with Chevy back in May. I may love it even more, since it’s validation from the Gray Lady that conversational marketing — if done transparently and authentically — can coexist comfortably with the most respected ethics in journalism.

Chevy NYT Artilces

(Disclosure: The Gray Lady is an investor in FM.)

Business Week on Chevy's Best of Green Web

The crew at Business Week’s Blogspotting isn’t convinced that Chevy’s Best of the Green Web sponsored site is conversational enough:

“Chevy says on the site that it wants to start a conversation. But if that’s the case, I would expect the site to be all about the technologies that will make cars more fuel efficient and less damaging in terms of resources used and carbon dioxide emitted. And I would expect Chevy’s folks to be contributing their own news about what they’re doing.”

I don’t think Blogspotting spent enough time at the site. Here’s the comment I posted to the original story:

“I agree with your critique of conversational marketing where marketing brands don’t have a voice in the discussion. In the case of Chevy’s sponsorship of the Best of the Green Web site, however, they do have a voice. Chevy is providing its own news and updates on its fuel-solutions technologies — see the left column, just below the Recent Comments. The idea is to take consumer feedback, and to addressed it issue by issue. Even tough questions like ‘Aren’t you the guys who killed the electric car?’ Creating authentic media — whether it’s editorial media or media connected to a marketing project — is hard work, and success is defined by each reader or viewer. Based on traffic and repeat traffic to this site, and engagement with the content provided by Chevy, this experience is working for a fair number of green-minded consumers. At the very least, it’s a move by Chevy in the right direction, a move towards a more fluid two-way dialog with customers.”