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Don't Underestimate Microsoft

An article published in today's MercuryNews.com  titled "Hooked On Google" by Elise Ackerman explores whether or not Microsoft still has a fighting chance in todays changing technology/media landscape.  When compared to the enormous success  the likes of Google has experienced over the last couple years, the picture indeed looks grim.  Ackerman points out in his article:

"Microsoft's page views, an approximation of how long visitors spend at its sites, was down 12 percent in December to 18 billion, according to the research firm. Google's page views were up 90 percent to 13 billion.

Microsoft has steadily lost ground in search, despite developing its own search engine in 2004. As of November, Microsoft's share of Internet searches has fallen to 8 percent. Two years ago, when MSN search was released in beta, Microsoft share's of U.S. searches stood at 14 percent, according to Nielsen//NetRatings.

Microsoft's Internet slide is reflected in its online sales. During the quarter ended Sept. 30, sales for the online business unit were $539 million, down 5 percent in a year. Google, in cruel comparison, reported revenue of $2.69 billion, an increase of 70 percent."

In fairness, Ackerman does offer that despite the above situation Microsoft has had a rather active 2006 by introducing a "slew of online offerings":

"In addition to the widely praised Virtual Earth, an exact 3-D representation of major cities, there were three new search services, a new portal, online video, classified ads, mobile e-mail and social networking. And perhaps most importantly, there was new adCenter software released in May that was supposed to help Microsoft make more money from its online offerings."

However, I think this misses a more important point why Microsoft should not be underestimated. 

Reason 1: They are the only major operating platform that cuts across desktop PCs (Microsoft OS), Mobile Phones/PDAs (Microsoft Mobile), TV (Microsoft iPTV) which both Verizon and Comcast are deploying across their massive Fiber and Coaxial nets, and Game Consoles (Xbox & Xbox 360).

Reason 2: Due to the reach across their installed platform base detailed above, Microsoft is in an enormously unique position to be one of the first companies to have a viable cross channel digital media offering.  From behavioral targeted web, e-mail and search  properties, to instant message, in-game  (via their purchase of Massive Inc. last May), mobile  and interactive TV advertising the folks in Redmond seem to be slowly transforming themselves from a software company to a media company.  Even though it does not exist now, it does not take one to imagine Microsoft's plans for using adCenter as the hub of their emerging cross channel media universe.

Reason 3. One word: PASSPORT.  Microsoft Passport accounts are central repositories for a person's online data and can include personal information such as birthdays and credit card numbers. They can also act as a single key to access many online accounts.

Microsoft uses Passport authentication for its Hotmail e-mail service, MSN Messenger instant messaging service, XBox Live Service, and Mobile Services. Several online retailers, such as eBay, Canon, Expedia and Starbucks, also use Passport authentication. Microsoft estimates there are 200 million active Passport accounts. 

It does not take a rocket scientist to guess that Microsoft will use this Central Customer Information (CIF) file to help deliver more personalized content/advertising to its opt-in customers as its able to understand their behaviors and activities across digital media platforms.

Its important to note...that I am hardly a fan of Microsoft.  Indeed, I have switched my work computer to the Powerbook just a couple of months ago.  I am a huge fan of the iPod (with exception to their Nazi DRM platform) and also plan to be one of the first to buy an iPhone when it is released.  I also do not proclaim to have a crystal ball that give me any special insight that the points made above will make a lick of difference.  All I am doing is agreeing with Gartner analyst,  Allen Weiner, when he states at the bottom of Ackerman's article: Don't Underestimate Microsoft.

Jeremi Karnell-President, One to One Interactive

 

Where Are All Those Clicks Going?

Last week Business Week decided to scare the world with a shocking cover: Click Fraud, The Dark Side of Advertising. This is about as timely as Roger Waters launching a tour where he plays the Dark Side of The Moon in full. If you recall, 12 years ago his fellow former Pink Floyd band mates had done the same. In both cases, you got to hear the Dark Side of The Moon but you didn’t get the full picture.  Which is more or less what you got in the Business Week article.  Yes, it’s true, there are cases in which as much as 15% of the clicks may be fraudulent, and yes, it’s true, the search engines may not be equipped to detect them.  However I felt very reassured when I read this article from an August issue of Fortune.  Apparently Nielsen has found a solution to the issue of measuring the impact of online advertising.  They have 30,000 households who will act as a sample, and they will be able to project from that sample the amount of  traffic that is really generated by online advertising.  Mmmm. Where have we seen this before?If you think I am taking the issue lightly I am not. 

These two articles point out a few major issues that as digital marketers we need to take extremely seriously.  First of all, whether we like it or not, the debate on the impact of digital marketing is now in the mass domain. The fact that mass media outlets are now covering the topic however does not change the fact that it is still a complex science. As an industry, we have a duty to set our standard higher than the standard expected by our clients or by the masses.  At the same time though it is extremely important to act as the voice of reason, and reframe the debate.  It is true that there are instances in which the measurement is not perfect, and it is true that there are instances of click fraud.  At the same time, for every 15% of fraudulent clicks, there is an 85% of legitimate, targeted and effective clicks.  The answer is not to go back and try to mirror the old media model, or even worse, to give up on Internet advertising. The answer is to keep working on improving the measurability of the web.

Notable Technology Marketers on MySpace

Below represents three major technology brands that are using social network site MySpace.com to promote their brand and/or products via their own MySpace page.

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Company: Cingular

URL: http://www.myspace.com/cingularsounds

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Company: Dell

URL: http://www.myspace.com/dellditty

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Company: Motorola

URL: http://www.myspace.com/motoq

Machinima Commercials

MIT Advertising Lab and Futurelab's Blog highlight some interesting early attempts at Machinima Commercials.  For those unfamiliar with Machinima, Wikipedia defines the production technique as:

"rendering of computer-generated imagery (CGI) using low-end 3D engines, as opposed to high-end and complex 3D engines used by professionals. Engines from first person shooter video games are typically used."

Consumers, armed with nothing more then a massively multiplayer game or 3D virtual world environment (such as World of Warcraft  or Second Life) are producing their own 30-60 second commercials and posting them on the likes of YouTube or Google Video.

MIT Advertising Lab and Futurelab Blog highlight the following examples:

• Beautiful (pictured above, a must-see), The Motel, and Video Camping for Nylon camera in Second Life (more info).
• An entry for Converse Gallery made in World of Warcraft.
• A spoof of the Bravia spot done in Battlefield 2 and a piece of MasterCard's "Priceless" theme in Halo.

Advertising 2.0

   Karl Long, at Futurelab's Blog, has found a nicely presented white whitepaper called Advertising 2.0.  Authored by Paul Beelen, a Spanish language blogger,  the paper covers the democratization of media, mobile technologies, RSS, Word of Mouth, contextual advertising, and blogs.

Jeremi Karnell-President, One to One Interactive

Anatomy of a viral campaign

Well, perhaps something more of a puff-piece, but it gives a nice back-story and overview of the "Flip the Dolphin" viral marketing campaign from Frontier airlines. Breezy, and touches on some good ideas about structuing a viral marketing campaign.

View the quicktime video on IHaveAnIdea.org

Blogs, Podcast, & RSS Advertising on the Rise

According to the Center for Media Research and the PQ Media's Alternative Media Research Series, ad spending withing blogs, podcasts and RSS feeds grew to $20.4 million by the end or 2005, a 198.4% increase over the 2004 level. Spending on blog, podcast and RSS advertising is projected to climb another 144.9% in 2006 to $49.8 million.

The executive summary of the report goes on to highlight the following key findings:

• User-generated media remains primarily national in scope with 98.1%, or $20.0 million, of all advertising spending coming from the broader market in 2005
• Advertising networks and click-throughs are the largest ad insertion methods, generating $8.0 million and $7.8 million, respectively
• Blog advertising accounted for 81.4%, or $16.6 million, of total spending on user-generated online media in 2005, but blog ads will comprise only 39.7%, or $300.4 million, of overall spending in 2010
• Podcast advertising totaled only $3.1 million in 2005, but is projected to reach $327.0 million in 2010, when it will account for 43.2% of all user-generated media advertising
• Spending on RSS (Really Simple Syndication) advertising totaled $650,000 in 2005 and will grow to $129.6 million in 2010
• Total spending on user-generated online media is forecast to grow at a compound annual rate of 106.1% from 2005 to 2010, reaching $757.0 million in 2010
• Technology was the largest single category at $4.0 million in 2005, due primarily to the technology-savvy early adopters of user-generated media
• Auto was the second largest marketing category, generating $3.9 million in 2005, as car manufacturers utilized user-generated media to market their higher-end models to the "influential" demographic
• The media industry spent $3.2 million to advertise in user-generated media in 2005, as the industry tried to capitalize on its advanced knowledge of the consumer shift away from traditional media

Top drivers of the above trend include continued media fragmentation, perceived ineffectiveness of traditional advertising, and the desire to more effectively reach the 18-34 year old market.

An Advertising Lesson from the Old Masters

                                                                   Whether or not Howard Stern and Opie&Anthony know it, they are borrowing marketing techniques from the best in the radio business. 

At first, I was very annoyed when I found out that 10% of my morning commute would still be interrupted by commercials (6 or so minutes per hour), even though I am now a paying subscriber of Satellite Radio.  Well, it turns out that the writers and advertising gurus over there anticipated my annoyance, and took an active step to remedy it before it became a problem.  Instead of listening to a carefully scripted and rehearsed commercial run over and over, they let the cast of the show slap together some ad-hoc bits that wove nicely into the show.  The banter was topical, the product being advertised was prominent, and the pace of the show really was not broken up to the point I felt the urge to change channels.  I know this tactic has been used on terrestrial radio for ages, but it has always felt bland and forced to me until this week. 

So I dug back into my radio archives and re-listened to broadcasts from Jack Benny, Fred Allen, George & Gracie, and Amos & Andy, and realized that, to a great extent, the tactic was identical.  Each show used fresh, topical interactions between cast members and announcers to push their products, as well as weaving them into the show itself in numerous cases.  I submit that they were under different format constraints back then (Live shows, Live Audiences, etc...), but the tactic works as well in 2006 as it did in 1935.  After just a couple of shows, I feel like I know more about the Lucky Strike, Jello, and Pepsodent brands than I do about most of today's products.  Not a lot of glitz, just good, relevant, topical advertising.

Of course, my whole theory could be thrown out the window next week if I hear the same ad-hoc bits from this week run over and over again.  But, if they can keep the ads fresh and interesting, then advertisers may find big success from this new(ish) channel....that is...if you're willing to look past the racy content to reach their aggregate 4-6 million loyal listener audience (and growing).

Adverts in RSS Questionable

In a recent article titled "The Price of Full Feeds", the Guardian offers some interesting insights into the early attempts to monetize RSS with advertising.  The emerging format discussed centers around publishers who offer subscribers the choice of the blog's full text with adverts, or a partial feed with no ads but linked to an ad-supported web page.  Top line issues include:

• Subscriber protest over not being able to receive full feeds
• RSS not initially built to support rich forms of digital advertising
• RSS disintermediating ad supported websites
• No "real" revenue associated with formats like Google AdSense
• Lack of consumer understanding of RSS Technology
  • Only 11% of 1,000 blog readers surveyed are using RSS for content consumption.
  • 66%, either "did not understand the technology of had never heard of it"