Friday, January 25, 2008

Why You Need to Be at the IAB Annual Meeting

Perhaps the signal moment at Hubert Burda Media's wonderful DLD Conference in Munich, Germany last week occurred on the morning of the second day. DLD -- it stands for "Digital, Life, Design," and the conclave is modeled in part on the venerable TED Conference, albeit with a distinctly European flair -- has grown in only three short years into the premier event for all-things-interactive in Europe. It sports an eclectic mix of speakers and attendees (members of the European Parliament, fashion models who blog, famous architects, unknown Israeli physicists, et al) and is, truth be told, kind of wacky. Its diversity and centerlessness fits the culture of DLD's sponsoring company: Burda is an extremely successful German periodicals publisher, among whose 260 properties are some of the largest news, womens', and lifestyle magazines in Europe, yet whose attitude is less businesslike than familial. One of Burda's core competencies is networking, and the annual DLD meeting networks together a curious and intriguing group, one absolutely devoted to touting the digital future. Needless to say, all speakers project that future to be quite rosy.

Which leads me to the moment in question. It occurred immediately after a swarm of speakers had completed their presentations to a packed house on, as the session titled it, "TV Reloaded." The presenters were a gallery of latter-day interactive video stars: Dina Kaplan, co-founder and COO of; Suranga Chandratillake, CEO of Blinkx; Niklas Zennstrom, co-founder of Joost; and Patrick Walker, head of content strategy and partnerships for YouTube in Europe, the Middle East, and Africa.

The panelists were fulsome about the imminence of traditional television's defeat. "What we're doing is very threatening to traditional TV networks," declared Ms. Kaplan, whose company specializes in episodic online video programming. "Too much is exploding," said Mr. Zennstrom (who, having helped to launch Skype, knows from explosive technologies). All this revolution needs to ignite it, Mr. Chandratillake suggested, is a way of navigating the new televisual cornucopia, and his company, a search engine with 18 million hours of video spidered and index, is that "next- generation remote control."

At which point the moderator handed the microphone to a gentleman in the front row. His name is Martin Sorrell, and he is the chief executive of the WPP Group, one of the world's largest marketing communications companies, and an engineer of the megamerger phenomenon that transformed and globalized the advertising industry in the 1980's.

"If there's a phrase I loathe, it's 'business model,'" Sir Martin said. "In my company, we have 102,000 people working in 106 countries. Our world is made up of revenues, costs, profits, and cash flow. I've heard a lot from this panel on what will be. But we do an enormous amount of business, much of it growing, with broadcast and cable television networks around the world. Can each panelist precisely say what their revenues, profits, and cash flows are today, and what they will be in a few years?

"Please," Sir Martin added, "be precise."

Unfortunately, almost no one was.

To be fair, Mr. Chandratillake, whose Blinkx is publicly traded on the London Stock Exchange, did say that he expected the company to achieve revenues of some $4 million in its current fiscal year, with costs running at twice that -- although, with IPO costs factored out, it would be close to break-even. But each of the others ducked. "In our first year, we came close to breaking even, mostly on software licensing," Ms. Kaplan said. "We will be profitable this year." Mr. Walker would say only that YouTube was rising "from low CPM's to $10, $20 CPM's," but would not go further.

Get-Real Time

The reticence was, and is a shame. It is time to get real. The IAB's Annual Meeting -- which we are theming around the primary development of the past year, the emergence of new forms of competition and collaboration across the value chain, a phenomenon we term "Ecosystem 2.0" -- is all about getting real, growing up... and grabbing share.

Make no mistake, we are entering into a reality-checking moment -- the second in the 15 years since the Mosaic browser was launched, ushering in the modern Internet era. The first reality check was the bursting of the dotcom bubble in 2001-2002. Now, as then, we face a recession and a slowdown in marketer spend. Likely, too, is a tightening in the availability of investment capital, as financial institutions retrench in the wake of the subprime mortgage debacle.

But other factors are quite different. The dotcom bubble was fueled by public equity financing, with individual and institutional investors accepting mad valuations and buying shares based on insane metrics. The 2003-2007 growth surge, by contrast, was financed with real cash looking for real revenues and returns. Whereas the recession of 2002 included a technology-market collapse (in no small part because IT spend had been boosted artificially for years by Y2K compliance considerations), tech companies (telecoms excepted) look to be weathering this downturn, as businesses embrace the productive and connective power of Web-based communications.

Finally, it appears now to be universally accepted by all segments of our ecosystem -- media, agencies, and marketers alike -- that marketing-communications is becoming a fundamentally digital enterprise.

For the past four months, I have informally been asking IAB member executives the single most insistent question on all our minds: In the event of a recession or significant economic downturn, what happens to interactive advertising spend? Almost universally, they believe a recession will not hinder the continuing growth of our industry.

$60 Billion Path

One week ago, queried thusly at the annual Bear Stearns Virtual Advertising Summit, I reported that finding to the analysts in attendance. They agreed that a recession will prompt a flight to accountability, and considered compound annual growth rates of 25% between now and 2011 entirely feasible -- leading to an industry that will reach $60 billion in U.S. revenues over the next four years. At that point, interactive will have become the nation's largest ad-supported medium.

Certainly, the bets have been large -- grand, even. Microsoft closed its $6 billion acquisition of aQuantive in August; CEO Steve Ballmer has said he expects a quarter of Redmond's revenues eventually to derive from advertising. Google anticipates closing its $1.6 billion of Doubleclick within the next few months; its CEO, Eric Schmidt, recently told The New Yorker's Ken Auletta that he believes Google now is "in the advertising business." Sir Martin last summer paid $649 million for 24/7 Real Media, an online ad-network pioneer; 20 years earlier, WPP had paid about $100 million less (unadjusted) to acquire the entire J. Walter Thompson global agency network.

But Sir Martin's call for precision in projecting, calculating, building and delivering is timely and apt. As the money -- not just investor money, but advertiser money -- gets large, there is a hunger for understanding and communicating the new rules of the road. What are the success stories? What is a fair price for value delivered? How will the new partnerships among agencies and media companies on behalf of marketers shape up? How will the regulatory environment affect our operations now and in the future? The people paying the bills want to know, and it's incumbent on the interactive industry to provide answers.

The Interactive Advertising Bureau's "Ecosystem 2.0" conference is designed to provide those answers, in an intimate setting where giants and startups can mingle together, leader to leader and team to team. This is the first industry gathering since last spring's and summer's explosive M&A activity to bring together the architects of media and marketing's dramatic reshaping. The focus will be on how the evolving relationship among platforms, publishers, agencies, and marketers is adding value to the value chain -- upstream, to the agencies and clients, and downstream, to branded content creators, analysts and insights generators, and service providers.

Yang, Falco, McAndrews

CEO Jerry Yang will keynote on Yahoo's evolution as a platform -- including its acquisitions of online ad exchange Right Media and ad network Blue Lithium. AOL CEO Randy Falco will sit down with me to describe the reasoning behind his acquisitions of the Tacoda behavioral targeting network and other networks, and the organization of a new ad platform business, appropriately named Platform A. Brian McAndrews, formerly aQuantive's CEO and now Microsoft's SVP of Advertiser and Publisher Solutions, will explain what he and his team have done to create cross-industry value in the six months since aQuantive climbed through Windows. Rob Norman, CEO of WPP's Group M Interaction, will explain how ad agencies are adapting -- and possibly leading -- the transforming industry. Hulu Chief Executive Jason Kilar will describe vividly how online video is attracting consumers and advertisers now. With an introduction by Johnson & Johnson Global Media Officer Kim Kadlec, the chairman of Babycenter LLC, Tina Sharkey, will showcase how media companies are becoming "insights engines" for their customers. In her first major speech since leaving the top U.S. sales role at Yahoo for the media presidency of Martha Stewart Living Omnimedia, Wenda Harris Millard (IAB's new chairperson) will outline a worldview shaped by alternate lives in a platform environment and in branded media.

"Ecosystem 2.0" also will feature substantive debates:
  • In an industry first, leaders of two online ad exchanges will challenge leaders of two branded media companies on one of our industry's roiling controversies: whether networks and exchanges commoditize media and advertising.
  • Booz Allen Hamilton U.S. Media & Entertainment Practice Leader Christopher Vollmer will unveil exclusive results from the consulting firm's "Marketing-Media Ecosystem 2010" study, zeroing in on how media companies are competing and collaborating in the new interactive environment.
  • In another first, a cross-ecosystem panel -- leaders from Ogilvy, Meredith, IAC Corp., Google, and Federated Media, joined by the Chief Marketing Officer of Computer Associates -- will respond to the study findings, grappling with who is disintermediating whom in the battle for revenues and share.
  • The brewing regulatory battle over behavioral targeting -- and its consequences for marketers and media -- will feature in another panel.
The IAB Annual Meeting also will provide a chance for the interactive media industry to celebrate itself, in several surprising ways we will announce in a few weeks -- not to mention in informal meals and at least a bit of partying.

With only a few hundred seats on offer, we anticipate an affair as comfortable as it is substantive. As unbridled opportunity and economic constraint collide, "Ecosystem 2.0" is what media, marketing, agency and service-provider executives need now: two-and-a-half days filled with news-you-can-use, sidebars for deal-making, and a chance to mingle with the leaders who are making a difference right now.

The full conference agenda is here.

Registration information is here.

And I hope to see you there.

Wednesday, January 02, 2008

A Geek in Aspic

Once upon a time (August, 1999, to be exact) aficionados of popular culture conjured a dream. They envisioned a "Jukebox in the Sky" -- a colorful, shiny, neon-bedecked contraption that would allow them instantaneous, universal access to all the music that had ever been recorded during the entire history of the world since Thomas A. Edison started scratching nursery rhymes into wax cylinders. And lo, it came to pass. From Napster and the Creative Jukebox to eMusic and the iPod, if your life needs a soundtrack, you can find it, program it, and wallow in it.

Of course, for some of us, that only whetted our appetites. What we really wanted was the Film Forum-in-the-Sky. And creating it is how I spent my holiday break... and my holiday heartbreak.

Look, let me admit it right off the bat: My cultural predilections are... aberrant. I loved the Napster phenomenon from the get-go not because it allowed me to steal popular contemporary tracks, but because it enabled me to reach across the globe to pull in my obscure, idiosyncratic objects of adoration, the love that dare not speak its name. The Les Baxter Orchestra. Julie London. Vic Damone. Spike Jones. Crooners. Lounge. Elevator music. I was hooked from my first search (the Cab Calloway-Al Jolson novelty number I Want to Sing-a, if you must ask).

And so, too, in film. Sure, sure, my list of favorites includes the standards -- Citizen Kane, The Third Man, Hitchcock's Notorious. We spent New Year's Eve watching the Fred & Ginger Marathon on TCM. But what I really crave are psychotronic movies.

Psychotronic Mania

The word psychotronic was coined -- in the way I use it, at least -- by Michael J. Weldon, who, back in the day, owned a small video store in the East Village of New York City that specialized in renting... well, psychotronic movies. It was the only place in Manhattan (to cite a special, personal example) where you could lease a copy of The Manster (businessman is injected with serum by evil Japanese doctor, grows a second head on his shoulder), unseen in these parts since Chiller Theater went off the air. As that example should indicate, "psychotronic" translates -- uneasily and incompletely -- into: Cult. Compelling. Odd. "B" movie. As notes, in an entry about Mr. Weldon's remarkable 1981 book The Psychotronic Encyclopedia of Film, the word "stretches to encompass horror flicks, spaghetti westerns, low-budget quickies, exploitation films of all stripes--in short, anything disdained by the critical establishment."

Those are the films I love. And while they're increasingly available by mail order, what a true fan really wants is instant gratification. Hence the Film Forum-in-the-Sky -- the infinite repertory cinema. Every movie you've ever wanted, the moment you want it. Time-travel Tivo. Netflix Now. The Manster, On-Demand.

In the years since Napster teased us with the prospect of such immediate pop-culture satisfaction, various technologies and devices have taken us closer to the ideal. The Bittorrent protocol and the file-sharing ecosystem that's developed around it have made an Alexandrian Library of cultural detritus available to diligent searchers (although I'd never recommend breaking copyright laws to get it). XBox Live, Apple TV, and TiVo Series II are among the devices that can retrieve, store, and stream They Saved Hitler's Brain (Nazis in South America scheme to use the preserved head of Der Fuhrer to guide them as they launch World War III) to the living room screen. One-terabyte hard drives can hold 700 or 800 Roger Corman exploitation films (although I don't think he made that many) for under $300. Together with the exploding number of online guides to genre films -- just today, I learned from the new io9 sci-fi blog of a new site,, which streams dozens of the best and worst psychotronic films -- they make the Film Forum-in-the-Sky a tantalizingly real prospect.

New Media Literacy

So near, but so far. For here's what I learned during my attempt to jerry-rig a home media server filled with cult movies:

  • Too many codecs spoil the fun. There simply are too many ways to encode movies and sounds, and no one serving solution currently can take them all. Xbox 360 does a great job streaming MP4's and some XVID's. Other XVID's will freeze the system and require continual reboots. Apple TV will only handle MP4's -- forget about DIVX.
  • You need to be 12 to figure this stuff out. Working through the encoding/streaming incompatibilities took the better part of a week and visits to several score Web sites -- most of which speak only Windows or Mac, few of which speak both. It's easy enough to learn that the VLC Player will play most codecs on your PC, and that the Videohub app can transcode most formats into most other formats. But after that, you're on your own. I spent four hours over the weekend trying to figure out why iTunes can change the metadata on some MP4's, while others it corrupts and renders unplayable in Quicktime. The answer? I DON'T KNOW! That's the point.
  • Stuff clogs. While Apple's done a great job making media accessible to the masses, Mac's move into movies has been more than a little confusing, especially when it comes to organizing libraries. Front Row -- Mac's media center application -- sources from one set of folders, iTunes sources from a different set of folders, Apple TV appears to source from yet a third set. Before you know it, you can have five or six different versions of the same film floating around various hard drives (and taking up the limited space on the stingy Apple TV hard drive).
  • Beware the bit rate. A 256kb bit rate may be perfectly adequate for streaming The Indestructible Man (a faulty electric chair turns Lon Chaney Jr. into a monster who cannot be killed), but it looks awful blown up for a 55-inch screen.
  • Creatures crave features. Fed by iTunes, music set a high standard for cultural gluttony. Music collections would almost miraculously self-organize, pulling metadata and album-cover photos from the CDDB, building playlists almost at will. No such luck with film. There's an open-source media center program for the Mac called Centerstage, currently available in alpha, which pulls film descriptions directly from the Internet Movie Database. Alas, it was among the several things (including my permissions, damn it!) that didn't survive the upgrade to Leopard.
My dream? One box, one simple box, that will search, retrieve, label, organize, store, and stream. From the Web (not from a closed system). Which will handle DRM (for everything out there). And -- very important -- that will eliminate the terms "codec," "bit rate," "transcode," and others akin from the lexicon of entertainment.

I'll wait. In the meantime, I'm going home to watch Glen or Glenda.