Amazon Freedive isn’t about ad revenue

Amazon IMDB Freedive logoListening to APM Marketplace discuss the announcement of the new Amazon Freerive service that’s teamed up with IMDB, they talked about the value to Amazon and the content providers through ad support. Trust us, this has nothing to do with ad dollars coming in, but more about acquiring more data about potential Amazon shoppers who may not be buying from Amazon now.

Amazon spends a lot of money with Google for ads now to drive sales, and what Freedive does is gives them yet another way to refine data about people who aren’t in their ecosystem due to cost. Amazon Prime isn’t for everyone. And there is a large part of America that can’t afford Netflix, Hulu, and all the other streaming services, yet still have a cell phone. Netflix has partnered with T-Mobile to offer free Netflix to it’s subscribers, and with the impending merger of T-Mobile with Sprint, Amazon may have to renegotiate wireless partners – Kindles used to be connected via Sprint but are now with AT&T and Prime can be bundled with Sprint Cell service. It’s starting to get messy.

But, the fact remains, the number one advertiser on Freedive will probably be Amazon, which already sells ads on their platform to manufacturers and retailers- and may bundle in ads on Freedive. Ultimately, Amazon still understands that ad supported content has value- especially when driven by digitally connected devices. Freedive is the future of broadcast television- with consumer level targeting of ads, with instant feedback. The real question is will they allow you to skip an ad to replace it with one you are interested in? That’s the holy grail of targeted ad platforms.

Amazon understands that while subscriptions are great for somethings, after a while, your subscriptions will start to show up on your credit report at the rate we’re going. You subscribe to software like Adobe Creative Suite or Microsoft Office to work, you subscribe to an ISP to provide the data, you subscribe to Netflix for movies, Prime for shopping, a wireless company for cell service (note- 5G could kill off ISPs) Dollar Shave Club for razor blades, Blue Apron for meals, the list goes on.

At some point, consumers can only bear so many monthly bills outside of rent/mortgage, utilities, insurance, transportation expenses etc.

Ad supported media may be making a comeback. Freedive isn’t the first and won’t be the last. At some point, Facebook may suffer some rejection by users who aren’t being compensated for their content on the platform. And while Netflix is a subscription- an ad supported version may not be far off.

That this is teamed up with IMDB and not clearly an Amazon product is another stroke of smarts. IMDB is an incredible viable and valuable online community where the contributors share knowledge willingly without compensation. This service only rewards them and helps support their site. One day, Wikipedia may have to look at this model as well.

When Amazon’s CEO Jeff Bezos bought the Washington Post and offered subscriptions for $100 a year (and a discount to Prime Members), it should have been viewed as just another way to connect consumers with the retail giant and providing data for targeting. At half the price of the NY Times, the difference becomes that the owners of the NY Times don’t have a mega-advertiser subsidizing them. Look for Amazon/Bezos to expand their newspaper holdings to gain eyeballs for Amazon ads.

Ad revenue might be driving the bottom line for Facebook and Alphabet for the folks on Wall Street- but, the real goldmine is and always be the connection of data with an individual consumer for targeting. Freedive will do just fine for Amazon, even if the ad revenue never amounts to much. Increased sales for nominal extra costs are a good thing for Amazon.

Self service media buying

Facebook Fit logoWe went up to Chicago yesterday to the “Facebook Fit” bootcamp. Every event at 5 locations through the nation has sold out- with about 900 people getting a peak at what will probably turn into a much more efficient system of teaching the masses how to serve as their own media planner/buyer.

If you can make it to the one in Austin- which still has tickets available (it’s their home base for this roadshow) go.

Facebook is far from being the first to self-serve sell media- Google and Yahoo have had automated systems in place for years. What Facebook has done is made really complex targeting based on huge amounts of psychographic, demographic, geographic, economic data tied in with buyer behavior information- accessible to all. Forget Nielsen, Arbitron, Media Audit etc- their data is in real time, and the tracking is precise.

John Wanamaker famously said “I know that half my advertising money is wasted, I just don’t know which half” with Facebook analytics, it’s really easy to tell what works and what doesn’t. And when it comes to reach- while other online advertising has a 38% effective reach- Facebook is claiming studies show they have an 89% reach.

When you also realize that all you need is a smartphone with a camera to make “a Facebook ad” with a visual and a few words of copy- ad agencies grip on “media buying” is almost as obsolete as Wanamaker’s dictum. If everyone was on Facebook- many marketers problems would be totally solved, but sadly- internet penetration isn’t what it should be in the US- and smart phones aren’t in everyone’s pocket.

Which brings us around to old school conventional media and media sales. There are a ton of options for every business to buy media- with or without the help of an ad agency. Of course, there are also people who think because they can rent the Adobe Creative Suite- they can instantly make great ads. Newspapers in our area did away with the agency discount decades ago- and the 15% commission model never really worked that well- encouraging buying quantity over quality to pad agency revenue. The real question is if media sales forces are still relevant?

We’ve seen massive consolidation in both TV and radio- with the idea that having a sales force sell multiple stations makes better business sense. Often agencies find they are competing with media reps trying to go to clients directly- with deals to make quotas and fill airspace. The Next Wave is wondering why media outlets haven’t gone to self-service online buying systems- with a totally automated sales and insertion system. Long gone are the days when reps picked up tapes from agencies- and why are they still serving as go-betweens to enter in schedules into a computer to see “if it will take the offered price” – when online dutch auctions have been selling space online for years.

Media properties should be focusing all their efforts on building relationships in their local communities and providing invaluable information in real time- be it news, concert info, local events etc. The return of the DJ, VJ, real news person is here- as always connecting with social media and web. If done right- local media can have a a renaissance. If done, business as usual- there is no hope for local media when going against a verifiable advertising media provider like Facebook.

In the future stores will know what you want before you enter

As Google continues it’s march into personalization of search results, before long, online commerce sites will be paying for access to your social graph to predict what items show up on your landing page. It’s not far off from what Amazon does by studying your past purchases, comparing them with what others like you have bought and making recommendations. But, sure, we’re talking about online digital items, not physical stores, where moving the atoms around for a box of laundry detergent is a whole other matter right? Wrong.

Google is even trying to map the interiors of buildings now. Not only will they know how to direct you to the bathroom, but, they’ll be able to guide you to the box of Tide in aisle 9. Combine a few other retail technologies, like the electronic price/item labels on the gondola shelving and you could have the shelf label glow a special color as you near the vast selection of detergents.

And the funny thing is, this kind of tech doesn’t require Google glass, or massive changes in the way the systems are built- it just requires the graph to be allowed to grow. Some of this social engineering may make our lives easier, but, it may also start insulating us from having to choose, to make informed intelligent decisions. Others may think it will liberate us from the mundane tasks so as to go on to bigger and better ideas and move humanity to a higher level.

Another aspect of this connected world, might be a whole new world of point of sale advertising- or, comparison ads. The basics are already there on the shelf- if you look at a cost per ounce price for comparison, but imagine being given an option to review a competitors paid last ditch pitch on why you should convert brands? You’d get paid a small amount of store credit, to view the comparison and then choose. If you choose the competitors brand- it would be added to your graph, and next time, you’d be asked, last time you switched from Tide to Era, did you prefer the Era? And so your graph would continue to grow.

Big data may drive a lot of the suggestions, but in the end, it’s just consumers voting with their pocketbooks like they’ve always done, that will drive markets. Of course, when everyone’s connected, all the time, and suggesting and rating, and we have perfect access, the cycle of success or fail may be shortened.

Going back to the old “Pepsi Challenge”- where more people picked Pepsi when blind taste tests were done, sometimes consumers stick with a brand for purely emotional attachment no matter what. If you want to win in the store of the future, maybe the key is understanding how to build emotional attachment points into your product/brand/service that can’t be overrun by the data revolution.

New ad supported services for targeted markets

An advertisers life was much easier when there were only 3 tv networks. Reaching everyone in the country wasn’t too difficult. Now, we know that even presidential campaigns need to spend billions to reach the entire country- and even then, there is overkill since there are still a lot of people who aren’t even registered to vote.

In doing some research for a friend into software for his medical practice, I came across a new marketing channel- attached to a software as a service. Doctors are mandated to switch to Electronic Health Records as part of “Obamacare” and by insurers including Medicare/Medicade. Practice Fusion is a provided of a software as a service solution- and instead of charging physicians for the system, they are counting on advertising to support the system:

How is your EHR free?

We have a unique ad-supported model. This allows us to provide a world-class EHR technology at no cost to you. These ads never pop up, never interfere with your workflow, and only display one at a time—see a sample ad here. We also make sure to provide you with ads that add value, such as co-pay coupons for your patients. A paid ad-free version of the EHR is available upon request.

via Free EMR | Providers of Medical EMR Programs and Services.

With pharmaceutical companies spending hundreds of millions to reach physicians to inform them of their newest drugs- Practice Fusion is in the enviable position of being able to put an ad in front of a physician while in the process of prescribing for that exact ailment. The ultimate sponsored search ad may be helping to keep the costs of health care down.

What other new media channels are being built to reach very specific markets by providing service in exchange for attention?

Imagine what could happen when textbook companies see this as the new model?

Will Google enter this focused market model too? It could be even more lucrative than search.

 

Why newspapers have lost their usefulness to advertisers and value to their community

A few friends on Facebook (a walled garden- a wasteful place to have meaningful discussions) had a discussion about the end of newspapers. Most of them had been in the business or still are. There were lots of repeats of the standard sky is falling misconceptions about why newspapers are dying:

  • young people don’t read newspapers
  • giving away content online is a mistake
  • releasing breaking news before publication devalues the print edition
  • advertisers aren’t advertising in them because they’ve moved to more trackable methods
  • the economy is bad
  • local businesses don’t advertise anymore
  • how can newspapers compete with aggregators and bloggers who steal their content

The problem is, all of them are missing the core issue- newspapers were never the best way to distribute news, they were just the best solution when there was no internet. Stop thinking of news as content to go in a “paper” and you begin to solve your problems.

Let’s look at the limitations of the original newspaper:

  • There is a deadline for “publication” that was fixed. If the story was going to be covered it had to be in process before 7 or 8 pm to make the midnight press time.
  • Newspapers have limitations on space- with additional costs to run longer stories. They can’t run video, audio, or most importantly update after the publication or engage in 2 way discussion.
  • A huge part of the expense of creating a paper was in physical equipment- and supplies. Printing presses, ink, paper, distribution had to be covered by advertising and retail sales, before the cost of content creation was even factored in. It lead to exclusivity and a monopoly in most communities.
  • Because of the costs of distribution- and the length of the supply chain, you didn’t have to compete with other papers in your community- unless people wanted to read day old or two day old news. Only a local paper could get the content to you quickly and keep it relevant.

Reaching back to a brilliant book from 1996, “Being digital” by Nicholas Negroponte, there is a single axiom that must be understood: “Bits not atoms.” In other words, things that are created digitally, shouldn’t be converted to atoms- paper with ink unless it enhances their utility. Very few things fit this axiom when it comes to news or advertising.

The only value proposition a local news outlet has anymore is to connect a community and to be able to really know each of their readers well. Since we’re no longer creating a one size fits all general newspaper- with a fixed size and lifespan, we must become the go-to resource for local advertisers selling atoms (physical goods) that people in the community want and need.

Even here- the problem becomes that everything is one click away to be bought from someone else online. Showrooming, the practice of going to stores to see the product and then ordering it online from someone cheaper is a major problem for those that sell commodities that don’t have a short shelf life (fresh groceries) or are too big to ship inexpensively (furniture, weight sets, car engines). So the market for advertising locally has become smaller- services, local restaurants, the arts, hospitals and health care, sports teams, they become the people who need local advertising the most- but, most of them have caught on to building friends and followers via social media – and can’t afford the newspapers overhead to be included- this includes the legions of sales people that news outlets employ to sell space in their finite paper or finite TV commercial space. Outdoor has seen a resurgence since it can’t be ignored, skipped, missed or requires a subscription.

Note: Google lets advertisers buy their own ads without the help of  a legion of salespeople- and, Google knows their readers/users really well by tracking behavior, serving up custom content.

Getting back to local news organizations, they’ve been acting as the anti-social media for so long: one way communication, highly controlled, exclusivity, monopoly in their media space, that they’ve become irrelevant. That’s a big part of why newspapers have lost their value to advertisers. But, there is one big factor that many in advertising forget and don’t like to acknowledge- the fallacy of composition: just because you are online and all your friends are online- doesn’t mean everyone is.

There is a digital divide. Besides being a country with pathetically slow internet connections, we’re not universally wired. We’re not even close- and to the people who don’t have a connection, they still depend on the printed edition. The problem is, they are generally not in the key demos advertisers want. This is why the idea of running community newspapers as a non-profit community service is becoming more relevant and interesting to those who think about the value of a well informed public- from everything to the important decisions on who to vote for, to understanding the issues of the day.

Advertisers who want to be considered good neighbors, who believe that a healthy, well informed community is good for their business may begin to have a reason to advertise and support a publication that improves their community if it is also able to serve as the community hub/forum that set the agenda for the community.

Civic pride and civic duty are the keys to journalism of the future as well as community building. The monetary value will follow the utility of the content, not the other way around. Seth Godin has said over and over that he’s made more money by giving away his ideas and that the widest dispersion is the best when it comes to his content. He’d rather sell you 10 copies of a book for a buck each and have you give them all away, than sell you one for $20. The value is in the connection and the value the journalist adds with that connection- that inspires patronage and pride in the product, not because the ads are useful or the coupons save the reader money.

In Dayton Ohio, we’ve been watching the experiment by Cox Media of trying to integrate TV, Radio and Newspaper under one roof since late 2011. TV and Radio are both facing the same fates, except broadcast TV has been giving away its content for free since TV’s inception as has radio. In the UK they paid for these services with a tax on TV sets and for the longest time independent broadcast wasn’t possible. The same thing that’s happened to newspapers with the net has happened to TV- now anyone can distribute video, on demand, and not have to own a transmitter or a license from the government, enter YouTube, Vimeo, Ustream etc.. Radio has been made irrelevant by iPods, Pandora, Spotify, etc.

Once again, the key to being relevant to local advertisers is local content. The non-profit public radio station understands this and has local people on the air, talking about local issues and events. For profit radio doesn’t even have to have a person in the studio all day anymore using voice tracking and programing from Texas.

What’s most funny about Cox is that they still think there is a difference between print, radio and TV- not realizing all of them can be engaged on a single device called an iPad. Yet, they maintain different sales forces, different rates and different websites- all adding costs and no benefits to the end user. Integrate and refine your messages to a simple, single stream and engage in the old One-to-One marketing idea and you may become relevant to your advertiser again.

Local advertisers need local media. Local media needs to have and know it’s local audience. Only then, will the two connect again.

And, just as Seth Godin says you make the most from giving away your insight, I’ve given my local media a gift in this post, I just don’t think they are ready to accept that their way is D.O.A.

Black Friday, Cyber Monday and desperation….

If retailers wonder why they don’t make money for 3 quarters of the year- it’s because they seem to forget that customers want deals everyday- not just 2 days a year.

Somewhere along the line- they’ve forgotten that customers always want things- like great service, prompt delivery, honest sales, product in stock, reliable products. Do you think people really enjoy standing in line for 3 days in the cold waiting for you to open your doors?

The old adage about “give a man a fish, he eats for a day, teach him how to fish and he eats for a lifetime” plays just as well in teaching customer behavior. By playing into this “Black Friday” madness you aren’t building customer loyalty, showing respect for your customer or delivering a positive shopping experience.

Remember when a few “lucky shoppers” were crushed to death in the stampede trying to get into a store for a “Black Friday” deal?

Relationship management is the key to building loyalty, trust and customer satisfaction- which all will lead to long term profitability. This “Black Friday”- show your customers some respect and leave the circus stunts for the competition- offering the first 10 customers some great deal- just pisses off the other hundred.

Is that your idea of “marketing” or is it desperation?