THE MOBILE WEB HAPPENED, SO DON'T ASK!


Live Blogging From the IAB's Mobile Leadership Forum

There hasn't been a conference, event, webinar, or bar fight this year at which someone at some point hasn't stood up and asked the question du jour: "We've been hearing for 10 years now that mobile is the next big thing -- so when's it gonna happen already?"

I'm sitting at the Roosevelt Hotel in midtown Manhattan. It's a bit after 11 a.m., at the end of the first break at the Interactive Advertising Bureau's first-ever "IAB Leadership Forum: Mobile." And the answer is becoming clear: It's already happened, so let's get going and adopt already.

The centerpiece of the morning was a series of mobile marketing success stories, featuring quick cases involving major consumer brands from a succession of service providers, agencies, and publishers. And as many cases as I've absorbed during the past year or two, even I was surprised at how far beyond experimental mobile advertising has evolved.

Eric Bader, newly ensconced as managing partner of mobile marketing and media company Brand In Hand after his successful stint as managing director of digital at Mediavest, rolled out a wagon train of Procter & Gamble mobile cases. And in many cases, they were reminiscent of the early days of cable television, when marketers and agencies needed to be bopped on the head to become aware of the segmentation and engagement opportunities in a new and unfamiliar medium.

For example, Eric noted that Vick's Dayquil had been successful in tying mobile ads to weather reports (a tactic that moved targeted campaigns for, say, automotive marketers onto The Weather Channel, back in the day). But what was so provocative in Eric's report was that the mobile component of cold-medicine's effort was that it outperformed the online component, with more downloads and more registrations collected.

"It's not to disparage online," Eric said, "but at scale, mobile was more successful."

Another creative Procter case he described was for Pringle's potato chips. Because snack foods rarely end up on written shopping lists, they are heavily dependent on impulse and in-store positioning. To drive Pringle's awareness, Brand In Hand helped develop shopping lists, sponsored by the snack brand, that could be accessed on the Web and through mobile handsets -- an opportunity to be on the list without having to be written on it.

"I have heard comments like, 'mobile is really for direct marketing, but not branding,'" Eric said. "I think that's mythology."

Vladimir Edelman, chief executive of Ansible Mobile, noted that the immediacy of mobile had broadened the landscape for branded marketing experiences -- in effect, creating engaging brand intersections in venues not previously thought of as brand-enhancing environments. He described an effort his company undertook for Babycenter, to create opportunities for mobile alerts and interactions for the new and expectant mothers who are this Johnson & Johnson-owned sites core audience.

"When we analyzed this audience's concerns, as expressed in their postings, it boiled down to three things: 'Is it dangerous? Is it normal? Can I eat it?'" Vladimir recounted. So Ansible developed a system that would allow for "call and response," via mobile devices, to such questions as, "I'm in a restaurant, and I need to know now whether I can eat shellfish in my second trimester?"

Babycenter's mobile alerts have grown an average of 263 percent per month. "If you need an answer now," Vladimir said, "mobile is a great medium."

Maybe artificially great. All the morning's speakers noted that mobile advertising clickthrough rates are much higher than online clickthrough rates -- as much as three times as high right now, reflecting the still-uncluttered mobile ad environment, and the novelty of mobile advertising.

Perhaps for that reason, prices for mobile ads are high. I anonymously texted a question asking about average CPM's -- thanks to Impact Mobile, IAB was able to debut a text-querying function at this conference -- and discovered that mobile advertising CPM's are averaging about $25, according to Julie Ask, the Jupter Research research director.

Ansible's Vladimir Edelman said his company is seeing CPM's as high as $125. "That will change over the next 18 months," he cautioned, "as the big money moves in and beats it down."

GOVERNMENT’S WAR ON THE WEB

With barely an acknowledgement of the myriad ways in which the Internet has revolutionized economic development, information access, and communications diversity, an increasingly organized coalition of anti-business groups is mobilizing to get the Government to shut it down.

And the scary thing is: They are succeeding. I’ve detailed this “break-the-Web” effort in an article in yesterday’s Huffington Post. I urge you to print it out, circulate it, and oppose the forces that would force you under. (More on that later.)

Because virtually all of you reading this are scrambling to build your businesses in the face of a looming recession, you’ve probably been too busy to notice that a drive is underway to goad the Federal and State governments to regulate the core processes and technologies that underlie the operations of the Internet. The anti-Internet coalition’s proposals hide under the cover of very real, very legitimate concerns that citizens have over their personal privacy. But rather than focus on the real privacy dangers – loose data security policies, identity theft, Government intrusions into citizens’ phone and email records – these groups aim to shut down “advertising networks” and “third party entities,” including those central to the infrastructure of interactive media and advertising.

Hatred for Consumerism

If it were merely technological ignorance that’s driving them, it would be correctable. But even a casual read shows these groups are actually opposed to the consumer economy itself. And in their hatred for consumerism, they have drafted recommendations so breathtakingly broad that, if they stand, many sites will go under. Particularly vulnerable are the small, ad-supported sites that serve niche interests – the political blogs, ethnic dot-coms, and hobbyist Web sites that depend on ad networks to sell and place their ads. (I identified some of the potential victims in a Business Week article last week: Web communities like Disaboom.com, an ad-supported site for people with disabilities, run by Dr. Glen House, himself a quadriplegic.) Right behind them are the newspaper and magazine companies that are building vertical ad networks to extend their audience reach on the Web.

Here’s a sampling of some of the proposals gaining traction in Washington and State capitals:

• The Connecticut state assembly is likely to pass a bill that labels standard interactive advertising practices “unscrupulous,” and would, for the first time in the U.S., regulate the Web by creating inflexible controls on how any third party involved in Internet advertising collects and uses anonymized data.
• A New York State legislator has introduced a bill that would allow consumers to pull non-identifying information out of aggregated databases and regulate the companies that deliver 90 percent of the ads on the Web.
• Under the implicit threat of formal regulation, the Federal Trade Commission has issued guidelines that would prevent media, agencies, and marketers from using non-identifying data to make ads more relevant and products more effective for consumers. The FTC would require Web site operators to obtain permission from users for any changes in their privacy policies – paradoxically, even if the sites have no information identifying those users or means of getting in touch with them.
• In a signed editorial, The New York Times asked the Federal government to regulate the collection of the types of demographic information marketers have routinely gathered for decades, and recommended that all online data collection, including the measurement of Web traffic, be banned unless users explicitly provide permission.

Let’s be very, very clear: The IAB is utterly committed to protecting citizens’ privacy. Peoples’ names, addresses, Social Security numbers, financial and health records, and anything that can be associated with their identity ought to be under lock and seal, if that’s what they desire. All the major interactive media companies are equally unswerving in their commitment; they know (and have expressed repeatedly) that violating consumer privacy expectations is virtually an invitation to users to flee their sites for friendlier environments. We favor (and are working with other major marketing, media, and consumer associations toward) meaningful self-regulation of consumer privacy online.

But let’s be equally clear that these anti-consumerist efforts are not about protecting peoples’ identities. They are about shutting down consumer marketing – and limiting consumer choice in communications and consumption. Jeff Chester, the frequently quoted proprietor of the Center for Digital Democracy and one of the FTC’s favorite anti-Internet witnesses, has increasingly come clean on his real motivation. He opposes practices “to get individual consumers to behave or act in ways that favor or reflect the marketer’s goals,” he wrote in his blog on April 11. He went at it again this week, writing to Business Week that the Internet is “a commercial surveillance system that rivals the NSA… all so we can be encouraged to behave favorably to some marketing message.”

Aversion to Democracy

Underlying this “break-the-Internet” activism is an aversion to democracy – a fear that, left to their own devices, Americans will make bad choices for themselves, and so must be protected from forces that might lead them toward such choices. Joseph Turow, a University of Pennsylvania communications professor and another frequent FTC witness, has gone so far as to decry the very diversity of information, entertainment, and commercial options on the Web – a repeated underpinning of his arguments in favor of Internet regulation. He has written of the “mutual cooperation and togetherness” Americans exhibited from the 1940’s through the late 1960’s, and of the "society-making media," including the "three-network universe,” that helped forge such social cohesion.

“Having the option to share the same marketplace of goods and ideas has become a central proposition of equality in the United States,” Prof. Turow argues. By contrast, he has excoriated "segment-making media" that "search out and exploit differences between consumers." "The emerging marketplace will be far more an inciter of angst over social difference than a celebration of the American ‘salad bowl,” he writes. Eyeing with suspicion what he calls “a database-driven culture of suspicion,” Prof. Turow asks, rhetorically and paternalistically: “How should public policies respond to social divisions that are bound to grow as people envy the data files that enable their peers to get seemingly better prices, seemingly better service, or both?”

Repress the urge to suggest to him that public policies may be unnecessary, given the terabytes of relevant information available online to help people locate better prices or better service. Americans, he says, aren’t up to the task of choice-making. “You may try to jump from site to site to hunt for the best buy, but that's time-consuming,” Prof. Turow argues. “And there are comparative shopping sites such as Bizrate or Nextag, but these can be tough to navigate, and companies are learning quickly how to game the system.” The only solution, he suggests, is regulation.

Prompted by this opposition to consumerism, the pro-regulation forces are attempting to redefine the concept of “identity” so it extends far beyond the boundaries with which it has typically been delimited. Mr. Chester, for example, talks about “our information” and “our data” as if online media and advertising have the inherent ability to vacuum up any and every individual’s name, rank, and serial number. If that were the case, it would be subject for worry. Indeed, interactive media companies DO need to understand that many consumers have legitimate concerns -- "creeped out" is the phrase you hear most frequently -- about what sorts of information is collected from plain-vanilla Web-surfing, whether it's merged into direct-marketing databases, and what's sold by whom to whom, and for what purposes. Concerns needs to be allayed with facts, and when issues arise that require action, we, as an industry, must address them with complete transparency.

Redefining Identity

But rather than zero in on the real issues, the anti-Internet activists are exploiting these concerns to seek regulatory approval for a new property right over any behaviors, including those that are not associated even indirectly with an individual – even behaviors which cannot be observed.

“…In today’s digital marketing era,” Mr. Chester wrote this week on his blog, “the very tiny bits of personal behavior they [interactive media companies] have identified are parts of individual human identity. Our ‘virtual’ identities may be composed of discrete and disassembled bits of information about ourselves: —what we like to read, watch, buy; our problems and concerns (such as health or our children’s education) or our political interests— but they are very much living aspects of ourselves.”

While the metaphysical nature of identity is a fascinating subject for philosophy and classics majors (myself included), such breathtaking redefinitions of established norms can make for very bad policy – and horrifying economics. If businesses are required to institute consumer opt-in’s for all measurements of consumption behavior (as Mr. Chester, The Times, and others propose), then bar-code scanners could not be used to tell retailers whether they need to restock shelves. TiVo would not be able to let the television networks know which programs viewers are avoiding. Research companies such as R.L. Polk (which for decades has used state auto-registration data to provide insights to auto manufacturers) would have to stop telling Detroit how to be competitive with Japan. Social scientists who pore through consumption data to tell us whether we’re going green or wasting energy, eating nutriciously or ingesting fat, buying domestic goods or favoring imports would have to go back to guesswork.

And, needless to say, interactive retailers would not be allowed to suggest products or services to you based on your preferences, search engines would not be allowed to serve ads to you based on your queries, and publishers would not be allowed to measure site traffic or customize their home pages to your interests. All of these activities require “behavioral targeting” and “third parties,” as they currently are defined (with astonishing breadth) in the regulatory proposals floating around Washington, Hartford, Albany, and Manhattan.

I’ve already been tarred by the anti-Internet forces as an “online ad industry lobbyist.” (I am not.) Prof. Turow has complained that I’ve made “fundamental misrepresentations” of his work. (Read his books – here’s the Amazon link again.) But let me make a few other suggestions to those in the interactive media and marketing worlds who care about the future of our industries – and the future of communications diversity:

• Read the proposed regulations, and write their sponsors to oppose their loose language, over-reaching breadth, and the harm they would impose on media companies, small businesses, consumers and citizens. In particular, send the State legislators my Business Week, Huffington Post, or Wall Street Journal articles and ask them why they are proposing far-reaching, rigid regulation rather than working with the IAB, a dozen other industry groups, and the FTC to create meaningful, effective, and less destructive self-regulation.
  
• Visit your Congressman and State legislative representatives and offer to provide a tutorial about how interactive marketing and media work – and don’t work. The best weapon against ignorance is education.
• Write your own Op-Ed Pieces! Your local newspaper and your favorite blogs are terrific places to educate the public – and dispel myths – about interactive media and advertising. They can also help all of us pick up legitimate concerns, around which we can coalesce the industry to become a force for positive change.
  
• Contribute to the IAB’s Political Action Committee. Write to our association’s one actual lobbyist, Mike Zaneis, for information. Even small contributions will help us get our message across in Washington.
• Love your consumers. Don’t do anything you’re not willing to talk proudly about in public. And make sure your privacy policies are crystal clear, written in English (or whatever the preferred language of your audience is) and posted prominently.

PORK BELLIES VS. DIAMONDS: A FALSE DICHOTOMY

An
Ecosystem 2.0 Post-Mortem

Those of you who were part of the sold-out crowd know that IAB’s just-concluded Annual Meeting in Phoenix was a soaring success: We made news repeatedly, we celebrated the difference-makers who are building the interactive industry, we facilitated deal-making among member companies, and – most importantly -- we brought into the open, for public debate, the sorest, most troublesome issue for our membership: Are advertising and the media that convey it just another commodity, or do they have transcendent value for marketers and consumers?

My answer: Both.

The debate was exquisitely captured over the three days in a thrust by IAB’s new chair, Wenda Harris Millard, and a parry by Doubleclick executive Michael Rubenstein. In a widely blogged comment in her speech opening the Annual, Ms. Millard, the president, media, of Martha Stewart Living Omnimedia, told the packed house, “We must not trade our advertising inventory like pork bellies.” Mr. Rubenstein, the head of Doubleclick’s new online advertising exchange, responded two days later, during his appearance on a panel debating the pros and cons of exchanges. Noting that the trading mechanism and the value of the traded product are distinct from each other, as they are in the gem exchanges of Antwerp, he said: “We like to think of our publisher impressions as diamonds, not pork bellies.”

Please note that at the end of this clog, I intend to give a major-league plug for our March 31 conference that is devoted solely to this subject, “IAB Marketplace: Networks & Xchanges,” an all-day deep dive in New York. But now (and over the next several weeks, if I can hold to a schedule), I’d like to offer some history and analysis about the progress of advertising, and why the IAB has made the evolution of our value chain a top strategic priority for 2008.

Portals Become Platforms

Midway through 2007, I became aware of tonal and contextual changes in the way many corporate leaders in the interactive industry were speaking. Chief Executives of several “portals” were rebranding their companies as “platforms.” A portal, according to Wikipedia, is “a site that functions as a point of access to information on the World Wide Web… [and] offer[s] other services such as e-mail, news, stock prices, infotainment and various other features.” Central to their user-friendliness in the early days of the Web, “portals provide a way for enterprises to provide a consistent look and feel with access control and procedures for multiple applications, which otherwise would have been different entities altogether.”

In other words, portals portrayed themselves to consumers as the only interactive resource they would ever need – hence their attractiveness to financiers and advertisers in the late 1990’s, and the fear they struck in the hearts of branded media incumbents. The widespread belief was that one or two portals would establish themselves as the Web’s operating systems – closed structures with enormous influence over consumer and business behaviors.

Platforms appeared to be something different altogether, and in conversations over the course of last year with Yahoo! co-founder Jerry Yang and AOL CEO Randy Falco, I heard the language of control being replaced by the language of participation. At the Right Media Open last October, Mr. Yang defined a platform as “a business that has a set of standards that allows a set of companies to participate and find benefit from it.” He added: “Yahoo will have to embrace openness.”

At roughly the same time, Mr. Falco, less than a year into his tenure as Chairman and Chief Executive, unveiled what seemed a similar strategy for AOL. “With the increasing fragmentation of online audiences, the best way to serve advertisers is to enable them to harness massive advertising networks that reach across the entire Internet, not just our AOL websites," he said. The new aggregation of third-party sites and tools and services for advertisers and publishers would become its own business inside AOL, called Platform A. “With the launch of Platform A, we are unleashing this powerful network to deliver unrivaled transparency and return on investment for our marketing partners,” Mr. Falco said.

Netscape founder Marc Andreessen, now running a social-network facilitation service called Ning, confirmed that the shift from control to openness was more than linguistic. “A ‘platform,’” he wrote in a widely-circulated blog posting, “is a system that can be programmed and therefore customized by outside developers -- users -- and in that way, adapted to countless needs and niches that the platform's original developers could not have possibly contemplated, much less had time to accommodate.”

“The key term in the definition of platform is "programmed,” he added. “If you can program it, then it's a platform. If you can't, then it's not.”

Network of Fear

But there is a problem, Houston: A lot of the intended beneficiaries simply do not believe the behemoths. In most of my conversations with branded-media providers in our membership, the old fears of portal control are still extant and, if anything, more jagged in the dawning era of platforms. Everywhere they turn, media incumbents are seeing threats to their ability to hold their audiences, or price their ads appropriately to the value they deliver: Online ad exchanges are driving their advertising prices down… Widgets on social networks are decontextualizing their expensively-built content… Online networks are delivering ads to tiny sites, many of which are built on links to the major media sites whose lunch they’re eating… Behavioral targeting technologies are divorcing ads from context entirely…

That open platforms seem as much of a danger as closed portals became clear when I started doing formal interviews with members of IAB’s Board of Directors to prepare our 2008 strategy and operating budget. To the question, “What new technologies, platforms, or application categories do you see as potentially disruptive threats or opportunities to your business?,” the answers – from both our network-based members and our branded-media members – were startlingly consistent: Behavioral targeting vs. contextual targeting… Pricing challenges… The value of the differentiated user experience… Supply chain efficiencies in an increasingly fragmented media environment… Interoperability standards that could synchronize millions of sites and hundreds of agencies… Agreement on core metrics… Teaching marketers, agencies, and media alike about the new opportunities and challenges…

Thus was born the theme for our Annual Meeting, Ecosystem 2.0. The interactive industry needed a place to air its concerns and showcase its opportunities – to ourselves. And that means all of us – platforms, publishers, marketers, and agencies – for, as became abundantly clear through the multiple presentations last week, the boundaries that once cleanly separated buyers and sellers, clients and agencies, service providers and customers, are shifting, even eroding.

Benjamin Franklin argued a variation of this challenge when he urged the 13 fractious colonies to come together and declare independence from Great Britain. “We must, indeed, all hang together,” the Colonial pop philosopher said, “or most assuredly we shall all hang separately.”

At our conference, though, Federated Media founder (and IAB Board member) John Battelle argued it more succinctly. “We’re all in each others’ shorts,” he said.

Heat and Light

Mr. Battelle’s contention wasn’t a complaint; it was a simple affirmation of truth. It echoed the refrain Ms. Millard repeated throughout her keynote: “My space is your space.”

But if you listened closely to what Ms. Millard was saying, you realized that she was doing more than describing our evolution: She was issuing an invitation.

Let’s not minimize the tensions in the marketing-media ecosystem. Forbes.com CEO and IAB Board member Jim Spanfeller opened the onstage debate we structured on the role of online exchanges by charging that “the fully-executed concept of networks and exchanges is to disassociate content from the advertising.

“That’s not good for the end user or for the advertiser,” he said.

Bill Wise, the General Manager of Yahoo’s advertising exchange, responded that exchanges like his provide media like Mr. Spanfeller’s an opportunity to sell advertising more efficiently. “There’s a lot of inventory that doesn’t need a sales force,” he offered. But Patrick Keane, Executive Vice President and Chief Marketing Officer of CBS Digital – and a former senior Google executive before leaving that “portal” for the branded-media world last year – captured the essential concern on the “contextual” side of the industry.

“I remember trying to get Jim and his team to ‘surrender’ premium inventory to Adsense,” Mr. Keane, an IAB Board member, told panel moderator Michael J. Wolf, the former Chief Operating Officer of MTV Networks. Adsense is Google’s advertising network. “Now that I’m on the other side of the fence, I know we have a sales force with great client relationships, and it’s hard to surrender those relationships to the four-letter-word called ‘auction process.’”

Nor could the jockeying for position among the various platforms that occurred during the Ecosystem 2.0 conference have been comforting for branded-content leaders like Mr. Spanfeller and Mr. Keane. While Yahoo! CEO Jerry Yang and President Sue Decker took pains to reassure publishers that their intentions toward them are honorable --- their forthcoming platform, the Advertiser-Publisher Exchange, or Apex, will optimize advertising for agencies and publishers alike, they said – a vision of oligopoly could not have been far from the minds of many. Microsoft Advertiser and Publisher Solutions Group Senior Vice President Brian McAndrews calmly predicted that if his company’s bid for Yahoo! is successful, there will be only two platforms in the industry, his and Google’s. That prompted AOL CEO Falco to retort the next day: “"Microsoft and Google can ignore us and leave us off of charts if they want, but they do that at their own peril."

I did find some of the argument a-historical. Television advertising, almost from the dawn of network broadcasting in 1949, always disassociated advertising from content. Once the "Quiz Show Scandals" killed sponsored programming, TV advertising was dominated by spots created to air promiscuously across all forms of programming on all the networks, with only the barest demographic differences entering into agencies' calculations of where to place the ads. That's why the television industry has been able to use an exchange -- albeit an opaque and non-mechanical one -- to sell so much of its inventory. It's called the annual Upfront Marketplace.

Still, for all the drama, it was clear to all during the conference that relationships are changing, as technology allows competition to take new forms and all of us face rivals we couldn’t have dreamed of 10 years ago. Microsoft, the world’s wealthiest technology company, now owns one of the most prominent interactive ad agencies, Avenue A/Razorfish, and in bidding for Yahoo, hopes to take in the largest interactive advertising distribution network and content provider in the world. The WPP Group, the world’s second largest marketing-communications company, is now a media company; its acquisition of the 24/7 Real Media ad network makes it both a buyer and a seller of inventory.

Put another way, both WPP and Microsoft now have units in the IAB and the AAAA. They won’t be the last ones, either: We're all in each others' shorts.

Marketing-Media Hermaphrodites

Many less-recognized examples of these new competitive dynamics surfaced during Ecosystem 2.0. On the Battelle-moderated panel on coopetition, Lauren Wiener, Senior Vice President of Meredith Interactive Media, reported that the venerable women’s magazine company has expanded dramatically into other forms and functions, and is now both a distributor of Kraft advertising and the food company’s CRM agency-of-record. Group M Interaction CEO Rob Norman, in a spellbinding presentation that shifted tone from the comic to the complex, revealed that agencies like his are likely to start buying and trading media for their own accounts.

Face it, we’re living in an industry composed increasingly of marketing-media hermaphrodites. “The media company is rather redefined in digital,” Christopher Vollmer, head of the U.S. Media and Entertainment Practice at Booz Allen Hamilton, said in presenting the latest findings from “Marketing-Media Ecosystem 2010,” the groundbreaking collaboration between the global strategy and technology consulting firm and the IAB, the Association of National Advertisers, and the American Association of Advertising Agencies.

The Booz Allen research provides startling evidence of the degree to which we’re all in each others’ shorts. Ninety-one percent of the media companies surveyed said they are currently providing agency-like services. Eighty-eight percent say they are providing campaign development and strategic services directly to marketers.

Yet for all that, media still are under-leveraging their opportunities: While two-thirds of media companies are providing consumer insights to marketers, it was only no. 7 on the list of agency-like services they offer. Perceiving an unexploited opportunity, Mr. Vollmer told media companies they should feel anything but threatened. “The antidote to commoditization is to have much more granular data on your consumer,” the Booz Allen consultant told the audience, “almost to the point of managing relationship marketing.”

No wonder Ad Age titled its post-mortem on the conference, “Why You Should Be in the Media Sales Business.”

Marketers Want Relationships

Marketers appear to like the situation: Almost half say they anticipate their relationships with media companies increasingly to resemble the relationships large retailers currently have with major consumer-products manufacturers. That is, they expect major cross-platform publishers to have teams living at General Motors and Unilever, the way Procter & Gamble currently has a team living in Bentonville, Arkansas, to keep the relationship with Wal-Mart successful, profitable, and fully optimized.

Kim Kadlec, Chief Media Officer of Johnson & Johnson, agreed. "Media companies are the most underleveraged resource for insights that exist," she said. She then introduced Tina Sharkey, the chair of Babycenter LLC – the largest destination site on the Internet for new and expectant mothers.

Babycenter is yet another of the hermaphrodites populating our industry: Supported by revenues from multiple advertisers, as befits a leading media company, it also happens to be wholly-owned by J&J, which has managed to keep the relationship between the two companies sufficiently bounded to protect Babycenter’s business and integrity, while mining it for useful consumer insights. As Ms. Sharkey (an IAB Board member) showed in her fascinating (and highly buzzed) presentation, the insights derive from analysis of blogs, observed consumer behaviors, and the myriad other interactions that take place between users and the company, and among users themselves, as they traverse pregnancy and early motherhood.

“BabyCenter has taught us that media companies don’t just sell pork bellies, they sell much more,” Ms. Kadlec said.

Blogger and Edelman Worldwide public relations executive Steve Rubel caught the drift. Publishers, he wrote, are “disintermediating agencies -- even as they all downplay it.”

Interactive Boot Camp

Add up Ms. Kadlec’s, Ms. Sharkey’s, and Mr. Vollmer’s analyses, and you get a strikingly different view of the evolving ecosystem than the commoditization fears convey. Marketers are not looking for cheap inventory; they are looking for relationships. They understand – quite correctly, as my earlier blog post on the history of social marketing, showed – that strong relationships with consumers breed more consumers, and more sales. Individuals talking to other individuals about their preferences and purchases spur more and more enduring sales opportunities than all the “spots and dots” shotgunned across the media. “Advocacy trumps awareness” is how Booz Allen summarized the new view of marketers toward media.

Marketers have been crystal clear that relationships are what they are seeking. When H.J. Heinz invited the IAB to facilitate our Interactive Boot Camp for Senior Marketers for its entire senior marketing team in Pittsburgh recently, the revered food marketer owned up to one primary interest: Using social marketing and social media to build closer alliances with its consumers and customers. We brought a senior executive from Myspace, as well as DDB CEO Chuck Brymer, to help teach them the ropes.

“Companies will need to train themselves with a new ‘dialogue’ skill set and build expertise to leverage a whole new set of available tools,” Heinz CMO Brian Hansberry told us afterward. “IAB's marketing boot camp enabled us at Heinz to begin that work.”

But note something vital here: We brought a great agency executive in that room along with some great interactive media companies. Even as the competitive boundaries change, the importance of classic, discrete skill sets remains undiminished. It is unlikely that media companies will be able to hire enough strategic marketing expertise to fill clients’ needs. And even as the best agencies help their clients develop sites that look, sound, and feel like infotainment (as Digitas has done for Kraft, to cite one ready example), it’s unlikely that agencies will be able to insource all the independent, audience-gathering skills that the best media companies manage.

The media agree; they don’t want to take on the burden of providing most agency services. While they intend to compete in generating insights – “It’s a competition for good ideas, and good ideas get funded,” IAC Media and Advertising CEO Peter Horan explained at our conference -- by a 3-1 ratio, media execs told Booz Allen that creative production should remain the province of agencies. They are equally sure that communications planning and media planning are the agency’s responsibility.

Clients see it the same way. “We don’t need media companies to be our agencies,” J&J’s Ms. Kadlec told the IAB crowd. “We need media companies to do what they do best: Create great content, and draw audiences to it.”

Networks & Exchanges

It is not a simple charge. Drawing audiences now fragmented across tens of millions of sites is hard, hard work. That challenge will only grow more daunting once addressable television enters our dens. And creating great content? If that were easy, every blogger would be a best-selling author, and every Youtube uploader a James Cameron.

Which is why I believe the dichotomy between environment and commodity – as represented in the debate between branded-content sites and platforms, or the contest between behavioral targeting and contextual targeting – is a false one. Both have their place, each serves different marketer needs, and neither is likely to be able to exist without the other. To create advocates, marketers require the relationships that engaging content creates. They need the trust forged by The New York Times, the comfort purveyed by Martha Stewart, the style identified with Conde Nast, the technological savvy conveyed by CNET, the wonder associated with Disney.

Marketers also will need to go deeper into those attachments, which is why they and their agencies will use networks to find the smaller sites, many of them without direct sales forces, that inflame the passions of consumers everywhere: The laughter generated by FunnyorDie.com… The nesting tips on Askthebuilder.com… The insider gossip on Gawker.com… The felinophilia of Icanhascheezburger.com… and on and on, ad infinitum (or so it seems). For these reasons, marketers and agencies will use networks – vertical networks for depth, and broad networks for reach. Yes, reach: As important as relationships are, marketing cannot live on advocacy alone.

Already, we are seeing the merger between the seemingly opposing forces of context and commodity. Many branded-media sites are launching their own vertical networks – catching portions of the Web’s long tail and sheltering them within their brand environments. Indeed, the clean segmentation that used to characterize the media is breaking down. The Booz Allen research shows 84 percent of media companies offering contextual targeting services, 70 percent offering behavioral targeting, and about half providing clients with performance marketing services, email marketing, or both.

For such reasons, I expect many branded media will start using exchanges to help lower their average cost of sales, freeing capital to invest in the enhanced services, insights generation, consultative services, and audience gathering that marketers and agencies need.

Marketplace of Ideas

Which is why IAB is inaugurating a new type of conference on March 31. We call it “IAB Marketplace.” It aims explicitly to take a developing segment of the interactive media marketplace and to provide marketers, agencies and media companies close-in views of that segment as it evolves in real time – as well as introductions to providers they may want to partner with. We chose “Networks & Xchanges” as our first marketplace to showcase for one reason and one reason only: It’s the most controversial.

And as Ecosystem 2.0 showed, IAB loves controversy – because out of heat comes light. “It’s one of the most exciting conferences I’ve ever attended,” Doubleclick research and industry relations director Rick Bruner wrote in his blog. Thanks, Rick! But it’s nothing next to the excitement of our ecosystem as it evolves before our eyes.

Imagine the shorts we'll be wearing!

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 Blip.tv; 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.

Interactive Audience Research & The Quest for Truth

These were the opening remarks I gave a few moments ago at the Interactive Advertising Bureau's first-ever Audience Measurement Leadership Forum. That even is taking place right now at the Marriott New York Hotel in midtown Manhattan.


I have spoken and written about growing up as the son of a market and media researcher. What I have never said publicly is that my life has been framed by market and media research. Today, for the first time, I will tell that story.

My father entered Temple University in Philadelphia in 1948, to pursue a degree in marketing – a brand new major at the school, and one that combined his interests in business, radio and that new invention, television.

It was a good choice for a Jewish boy from Northeast Philly, for media research was one of the few areas in white collar business that had been open to Jews. That was true even in the advertising agency business, which today we recall for its friendliness to minorities. Other than in research departments, that had not been the case: One historian who reviewed the 1931 edition of Who’s Who in Advertising found only 92 identifiably Jewish names among the 5,000 people listed.

My father’s first post-college job was at the Benson & Benson research company in Princeton, N.J., which had been founded by Larry Benson, previously the managing director of the Gallup Poll. At that time, Princeton was the Silicon Valley of research. Startup companies dotted Witherspoon and Nassau Streets, most of them, like Benson & Benson, founded by refugees from Gallup.Later, when I was fortunate enough to attend the university located in that town, my Dad, referring to his walk from the train station to his office, liked to say he had “passed through Princeton.” It was a not-so-subtle acknowledgement that in the 1950’s, there were precious few real opportunities for kids of his background to have passed through Princeton.

Of course, by that time, he’d moved from Philadelphia with his family to the New York area. He’d been hired by NBC in 1957 to do research on the public’s potential reaction to another forthcoming invention, color television. His wife – my mother – had started up a small company that trained interviewers to go out into the field and conduct survey research. Their eldest child – that would be me – had made pocket money during high school by conducting hundreds of these interviews. Among my more pungent memories is lugging a 20-pound contraption called a “tachistocope” around the richest and hilliest sections of Ridgewood, N.J., trying to find scotch drinkers over 50 willing to let me into their mansions to show split-second flash images of different actors trying out for the title role in the Ambassador Scotch print advertising campaign.

Asking Questions

I learned that I liked asking questions for a living. I also learned that there is nothing more difficult than trying to find in a six block radius in Denville, N.J. a woman over 50 who is willing to test a vaginal deodorant. So I became a newspaper reporter, instead. Grilling Presidential candidates, I can attest, is much easier than filling the last gaps in a quota sample.

I mention this background because for much of the past 100 years, media and market researchers have been the business world’s most rugged, unflagging, and unfailing pioneers. Whether refugees from Germany, kids from the inner city, or emigrants from Asia, through the decades they have been driven by one goal: the quest for truth. What happened? What made it happen? What did they see? When? How did they react? Can we prove it? Can we repeat it? How are opinions shaped? Where do our preferences come from? Did it make a difference?


It is no exaggeration to say that these have been some of the most important questions asked – and provisionally answered – in public life during the past seven decades. Phrases that now are part of the fabric of everyday conversation originated in the classrooms and offices of researchers: “Personal influence…” “Public opinion…” “Opinion leader…” “Pollster…” “Survey said…"

It is also no exaggeration to say that the men and women behind such concepts were among the giants of American business and public life. Paul Lazarsfeld, Frank Stanton, Herta Herzog, Leo Bogart, Hadley Cantril, Art Nielsen, George Gallup, Elihu Katz – these were the people who pioneered audience research, invented media metering, forged modern politics, and shaped news and entertainment broadcasting. They even helped integrate the U.S. Armed Forces. Remarkable as it may seem, they walked the earth in our lifetimes.

Some of these pioneers still do walk this earth. And some of them are in this room. The technologies may change, but one thing remains constant: the researcher’s quest for truth.

Today, the opportunity to find truth in business and public life is greater than it ever has been. Interactive technologies are allowing us deeper and deeper access to peoples’ ideas, behaviors, and consumption patterns. We are able to combine sample-based research and census-based research to create a richer portrait of peoples’ lives than research scientists ever thought possible.

Research Startups

Entrepreneurs are taking advantage of these new opportunities. The research startups dotting the marketing and media landscape make the Witherspoon and Nassau Streets of Princeton in the 50’s look fallow indeed. comScore, Quantcast, Hitwise, Compete, M:Metrics, Omniture and scores of others have joined venerable firms like Nielsen to alter our understanding of social life.

Thanks to interactive technologies, media companies, too, have access to troves of information about the preferences, desires, and needs of their viewers, readers, and subscribers. They can deploy this information to make their news, entertainment, and advertising offerings more engaging and relevant to segments and sub-segments of their audience than ever before. Time Warner, Disney, Viacom, Conde Nast, Meredith are joining “newcomers” to the media business like Microsoft, and contributing to this deeper, richer, and more valuable picture of the why’s and what’s of consumer behavior.

These media and research companies, together with advertising agency and marketer research departments, are transforming the way the marketing and media ecosystem operates. Thanks to them, our portrait of society – a rendering that used to be painted with broad brushes – is now a pointillist painting.

Of course, with new technologies and the opportunities they unleash come new complexities. Last March, the Interactive Advertising Bureau hosted a Summit Meeting on Audience Measurement. Executives from comScore and Nielsen joined representatives from major advertising agencies, marketers, media companies, and media-marketing-and-advertising trade associations to chart the journey forward.

It was a significant gathering, because we all realized that we seek the same thing: to use the new emerging interactive technologies to bring us closer and closer to the truth about consumer behaviors.

IAB's Role

This conference is a direct result of that gathering. The IAB agreed then to take on a vital role: To demystify the metrics of interactive marketing. To help educate the marketplace about what works, why, when, and under what circumstances. To showcase the advances in audience research made by research firms, media companies, ad agencies, and marketing departments. To make this pointillist painting of human behavior even more refined.

This is a new role for the IAB. We join venerable groups in the marketing world, like the Advertising Research Foundation, the American Association of Advertising Agencies, the Magazine Publishers of America, and the Newspaper Association of America, in this activity – and happily so. Few matters in business today can be more important than shedding light on – and reaching agreement on – how we measure consumer behavior.

The people you will hear from today would make Frank Stanton and Paul Lazarsfeld proud. These contemporary research pioneers will describe for you the new ways they are looking at peoples’ media journeys. They will explain how they are bringing together methodologies to measure activities in different media. They will give you a sense of what’s coming next.

On behalf of the 450 members of the IAB, I thank all these pioneers for joining with us in advancing the science of audience research. I want to thank the IAB’s Research Council for helping to plan such a rich and provocative day. I want to thank all of you for taking time during a busy holiday season to pursue this quest for truth.

Clompilers Unite! You Have Nothing to Lose Except Maybe Everything... or Vice Versa, Depending On How Good a Partner You Are (or Aren't)

Rob Norman -- CEO, Brit, renaissance marketeer... and now locutionist. At the IAB's Agency Summit last week, he loosed on the world a new, and in our world necessary, noun: clompiler.

Why necessary? Because there's nary a conversation in the marketing-media landscape these days that doesn't touch on the issue of co-opetition -- the increasing tendency in decentralizing industries for competitors in one arena to become collaborators in another. Yet there doesn't seem to be a good term for those that engage in co-opetition. "Co-opetitors" never did seem to cut it.

Enter Mr. Norman and his word: "clomplier." The Chief Executive of Group M Interaction defines it on his blog thusly: "A company which in its various guises is a client (cl), competitor (omp), and supplier (lier) to another company." For an example, I'd be remiss if I didn't refer you to Rob's site.

Mr. Norman describes himself as the only Brit capable of explaining the infield fly rule to his mother. I believe it.

Why Do-Not-Track Will Not Work

I love this Op-Ed piece in Business Week on the fatal flaws of the "do-not-track" proposal for interactive advertising and marketing. "Do-not-track" was proposed by a group self-styled "consumer advocates," and was much-discussed at the Federal Trade Commission's "Town Hall" on behavioral marketing two weeks ago. The proposal was riddled with ironies, not least of which was the group's recommendation that the Government start keeping lists of people -- by name -- who don't want anonymous surfing data utilized to improve the utility of online communications.

Christopher Wolf, a litigation partner in the Washington office of the Proskauer Rose law firm and the chair of its Privacy & Data Security Practice Group, recognizes the irony -- and also the extremist nature of the proposal. Here's what he wrote in Business Week:

"This would take privacy law to a new level, where protection is given not only to private data (names, addresses, account numbers, etc.) but also to anonymous data (e.g., data collected through cookie technology), which would be legally regulated. The complexity and enforcement problems with a 'do not track' law are enormous. Advocates liken it to the 'do not call' rules that pertain to telemarketers, but only the names are similar. Compiling and applying a list of those who do not want tailored advertising will be a technological nightmare. Compliance, to the extent it can occur at all, will be costly. Ultimately, consumers will suffer through increased costs passed on to them, and opportunities for more useful consumer information will be diminished."

You have to hand it to the extremist groups. By co-opting the tenor and feel of the telemarketing "do not call" concept, they have made a complex, radical idea -- one that would dramatically curtail marketers' and media's current ability to engage in advertising, marketing research, and information and entertainment delivery -- seem simple and benign. Fortunately, the FTC seemed to recognize this at the Town Hall: Commissioners repeatedly queried the anti-consumerist advocates, "Where's the harm?," and were met not with current information, but hypotheses about the future.

The real harm, as Mr. Wolf shows, will be if access to information is shut down. Prices will rise, and consumer choice will diminish.

Facebook's Grandfathers (& Myspace's, Too)

I like this piece in The Economist on Facebook's audacious new advertising plan -- and not just because it quotes me. Rather, the writer took seriously one of my long "there's nothing new under the sun" disquisitions that most of my friends and colleagues ignore. In this case, it's that today's social-networking and -marketing phenomenon is not at all novel. Rather, it derives from research done by two of the 20th Century's leading media theorists: Paul Lazarsfeld and Elihu Katz.

Lazarsfeld (pictured at right) was a famed emigre sociologist from Germany and Katz his student at Columbia University when they did the work that led to their pioneering 1955 book, Personal Influence. The book challenged a reigning theory of media influence: that mass media "work" directly, by injecting ideas into the minds of relatively isolated people. That notion was -- and still is -- almost reflexively accepted by anyone who has worked in or around media, marketing, and advertising. "Our programs and ads," we believe, "forge peoples' opinions." It is a tenet deeply-held by copywriters and anchormen alike.

Lazarsfeld and Katz showed that this "Magic Bullet Theory" was inaccurate. An earlier Lazarsfeld study had shown that only some 5 percent of Presidential voters had their opinions shaped directly by media messages. Together, the two scholars showed that media work more indirectly, through social influence. They identified a "two-step flow," by which media messages reinforced what people heard from others in one or another of their communities. These social influencers are, in the Lazarsfeld and Katz formulation, "opinion leaders."

Many of the assumptions that still drive modern marketing mavens were overturned 50 years ago by the two professors. Receiving a message does not imply responding to it, they showed. Moreover, top-down influence generally is fairly benign. People belong to numerous communities, and are influenced in different things by different opinion leaders. But just try telling that to a high-priced creative with a killer reel. It seems the world rediscovers personal influence every few years or so -- in the form of "word of mouth marketing," "brand advocacy," "guerrilla marketing," and "brand zealotry" -- only to forget it the next time a fabulous, award-winning ad campaign or a depressing, mud-slinging political campaign comes slamming down the airwaves.

The Facebook notion of defining the world's "social graph" -- "the network of connections and relationships between people on the service," in Facebook founder Mark Zuckerberg's phrase -- and deploying it in the service of marketers is the latest marketing spin around the half-century-old work of Lazarsfeld and Katz. (That's Katz at left.) What's changed, of course, is that when Lazarsfeld and Katz were writing, the only scalable communications tools available were mass media, notably the new phenomenon of television. Today, social networking sites of enormous reach -- larger than television's, because they have instantaneous global scope -- allow opinion leaders to shape attitudes in communities far and wide... and near and narrow. That's the promise underlying Facebook's notion to "marry an ad message to a user-initiated endorsement of a product or service," as Ad Age put it.

But Lazarsfeld and Katz bear re-reading, and not just for Silicon Alley cocktail party one-upsmanship. The importance of personal mediation means that television, radio, and print communications have always been filtered in ways their creators could not necessarily predict. The old saw that "nothing will kill a bad product faster than a great ad" is an example of this, although few practitioners recognize it. Today, with the Internet allowing all manner of influencers to wield their opinions in any way they choose, the relationship between the constructed campaign and its eventual effects is even more unpredictable.

In fact, it will take a supremely clever ad agencies and consumer marketers with strong stomachs to test themselves against the backlashes that seem all but inevitable. For if there's anything that might unravel your personal social graph, it'll be too many personal ads and endorsements tearing through it. The results might look like a book written by Dale Carnegie's evil twin: How to Lose Friends and Not Influence People.

Ecosystem 2.0

A day before the always-stimulating Google Zeitgeist conference at the search-engine giant's Mountain View campus a few weeks ago, I had the privilege of participating in a day devoted to advertising agencies and marketing inventiveness. My role was simple: I was to moderate to panel on innovation, featuring five pioneering interactive companies, all of them, in their own ways, direct or indirect competitors. The panelists were Tim Armstrong of Google, Randy Falco of AOL, Brian McAndrews of Microsoft, Mike Murphy of Facebook, and Michael Barrett of MySpace.