ChasNote

From Joe’s column in MediaPost:

“If I click on a paid link or banner for Nike shoes and make a purchase profiting Nike by $10, to say that the click on that link is worth up to $10 is stupid. Before I ever clicked on that link I have had so many brand interactions and product perceptions, from peer suggestions to celebrity endorsements, I couldn’t count them all even if I wanted to. It could even have been those interactions that caused the click.

“….it’s the product of a broken system and an addiction to Google’s amazingly efficient direct response model. But too many dollars fighting for clicks at the bottom of the funnel is causing artificially inflated pricing for those clicks. Thus, there is a real opportunity to move up the funnel online and achieve spectacular results for marketers (especially in social media).”

Right on, Joe.

Hey, it’s my site and I’m allowed to write snarky headlines.

Officially the news is this, as reported by Bloomberg: eMarketer plans to cut its 2008 and 2009 year-over-year growth forecasts for online advertising by a few more points, which currently stand at 23% and 16%, respectively.

“Google Chief Executive Officer Eric Schmidt said for the first time last month that the company, the biggest seller of online ads, faces a more challenging economic environment. Google’s ads tied to Internet search results are still faring better than much of the graphical banner ads sold by companies such as Yahoo and Microsoft.”

I have no doubt that the online advertising market, across the board, will feel the pain of the broader recession. I also agree that Yahoo, Microsoft and AOL will feel greater pain than Google. But it’s not because Yahoo, Microsoft and AOL — which sell mostly graphical banners instead of text ads — are used by advertisers for online brand-building, and brand advertising suffers more on economic downturns.

While the second part of that sentence is true, the first part isn’t. Most marketers buy low cost graphical banners on Yahoo, Microsoft and AOL for the same reason they buy text ads from Google, to drive clicks and other DR activities. Because they are less efficient DR vehicles than Google, they’ll be cut from plans first. The online publishers that have spent recent years working with advertisers on relevant, high-value, integrated sponsorships (rather than chasing Google) are going to fare better — in relative terms — than those three portals.

That’s a quote from Michael Nathanson, an analyst at Sanford C. Bernstein & Company, in today’s NY Times.

“On a conference call last month, Peter Chernin, president and chief operating officer for the News Corporation, toned down the grandiose expectations for social networking advertising and acknowledged that selling spots on personal profile and group pages is not easy.

“Social networking represents an ‘entirely new form of Internet activity,’ Mr. Chernin said.

“When MySpace’s parent, Fox Interactive Media, announced a three-year, $900 million advertising pact with Google in 2006, analysts started placing big bets that social networking would be a major new revenue stream. While the Web is becoming more social, it is hard to wring profits from it.

“Indeed, the balloon of unrealistic prospects is losing air. The attitude change was first detected at the end of January when, one year into its $900 million pact with MySpace, Google said that social networking inventory was not earning money as well as expected. (More recently, Google said the situation was improving.)”

Last fall (if not earlier), American Express recognized the importance of search equity, the status of its brand among the organic results from search engines. These results — the free ones, not the paid listings — are a proxy for the relevance and trust your brand has earned among its business ecosystem: customers, partners, the press and the peanut gallery. In other words, your brand’s position in search results reflects how active and successful you are in the conversation.

I say last fall because that’s when I first noticed American Express paying careful attention to the small-business authors and bloggers that rank highly on search results for SMB terms and phrases (including American Express trademarks), and making sure its ad messages surfaced on those high-influence sites.

Now American Express is making an even greater investment in its search equity, a greater commitment to having a voice within the small business conversation. It has partnered with top independent content creators covering small business — especially those authors who don’t merely create content but also use content to inspire a conversation — to produce the OPEN Forum Insight from Business Experts site.

Authors such as Anita Campbell of Small Business Trends, Scott Belsky of Behance.net and John Battelle of Searchblog are contributing exclusive content to the site. No plugs for Amex OPEN Forum Events or Travel Services from these contributors, mind you, just insightful editorial features on the topics Anita, Scott and John cover at their own sites. Content that appeals, quite obviously, to their existing audiences, which opens the door to efficient marketing in two ways. One, American Express is running ads on each site that invite readers to read more from the authors they came to read in the first place. Ads for original content by top business authors, targeted to those authors’ loyal readers? Needless to say, click-through performance on these ads is vastly better than average.

Two, authors don’t want to publish content and then hide it from their core audiences, so American Express is benefiting from some unpaid (and un-asked-for) promotions, like this call-out by Anita Campbell to her own content at the OPEN Forum site.

When audiences follow their favorite authors to the OPEN Forum site, they arrive ready for a conversation. A week in and visitors have clicked on the “I find this post useful” button more than 100 times, and the commenters are out-pacing the contributors based on word counts. Engaged visitors tend to carry the conversation with them, too, even as they leave the site that started it. According to Technorati, 17 blogs are linking to this section of the OPEN Forum site, and there have been news pick-ups by aggregators such as I Want Media (on 2/22/08). As more sites “endorse” the conversation by linking to it, Digging it and Twittering it, Google will take notice, and American Express’s search equity will feel the juice. And the 1% rule of social media suggests that for every comment post and every trackback link published, there are 99 others who quietly found the content useful. Search equity is the tip of the social-media iceberg — a partial indicator of a much larger phenomenon.

Congratulations to the team that put this together: Steve Clark, Jason Ewell, Naama Ashkenazi Bloom, Amy Fitzgibbons and Lou Paskalis at American Express; Rachel Bogan, Lee Baler and Scott Cappuzzo at Digitas; and James Gross, Marcia Simmons, Matt Jessell and Teresa Nielsen Hayden at FM.

Disclosure: When Battelle isn’t writing Searchblog, he is FM’s CEO and my boss.

Well, not entirely. If you search for “regeneration” at Google, the #1 result is a Wikipedia entry for the biological process that starfish, for example, go through when they grow back arms that were torn off. But the second entry, among nearly 18,000,000 pages identified by Google, is Dell’s site ReGeneration.org, a site (and brand concept) that was kicked off, in part, with a Graffiti drawing contest inside Facebook.

From an interview at Silicon Alley Insider:

“SAI: Haven’t ad networks played a role in holding down online CPMs?”

“Moore: I dont think its the networks that are doing it. I haven’t spoken to anybody who thinks media fragmentation is going to stop. I think we are dramatically underpriced compared to offline. The amount of money newpapers and magazines have been getting per thousand is outrageous. Newpapers and magazines are still getting roughly 30% of all advertising expenditures–yet if you look at their share of media usage, they’ve got between 7% and 9%. Thats why they’re having so much trouble.”

Oh, come on. Google and the ad networks are selling clicks, even when the advertiser signs an IO with the acronym “CPM” after the $0.70 price tag. They are giving away for free the vast majority of impressions, those that don’t generate a click. They are telling advertisers that those impressions have no value. Charging nothing for impressions that make a positive impact on creating demand and spurring consideration is, in fact, charging too little for the service rendered. Google and the ad networks are most certainly deflating CPMs across the media landscape.

Wenda Harris Millard, former sales chief at Yahoo, puts it succinctly (PaidContent):

“This is absolutely inevitable, entirely predictable and it is all about what happens when you lose sight of what business you’re in and who your customer is. Yahoo’s monomaniacal obsession with Google and its thinking that Google was its only competitor led to this. In fact, (in) a company where 90 percent of your revenue comes from advertising, it would seem the primary competitor would be broadcast networks.”

And Yahoo’s not alone. Google has made nearly every online media company forget what brand advertising is.

From Financial Times:

“‘We have found that social networks are not monetising as well as we were expecting,’ said George Reyes, chief financial officer, as Google reported its earnings for the final quarter of last year. Since Google has guaranteed to make minimum payments to a number of social networks that carry its advertising, principally MySpace, the slow growth of the business had left the company out of pocket and contributed to falling profit margins in the quarter, he added.”

And if you look at Nielsen Net/Ratings or Comscore numbers, you see that conversational or social media sites are driving most of the growth in online usage, so it’s fair to say it’s a very big deal. Perhaps Google needs a new approach to advertising within social-networking content.

Scott Karp at Publishing 2.0 lays out his “Five Guiding Principles for the Transformation of Media Companies.” Among them: The good old-fashioned monopolies over distribution channels once enjoyed by big media companies have crumbled, get used to it; search still rules the new media landscape, get smart about how search works; and figure out how advertisers can add value to the experience.

Erick Schonfeld at TechCrunch has a piece on one of my favorite topics, embarrassing moments in contextual advertising. These snafus are generally best at news sites, like this example from CNN (or this one), where news coverage of illegal steroid use in professional sports pulls along with it ads for sketchy purveyors of said steroids.