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Archive for March, 2008

The Situation

A few weeks ago I covered the negative economic reality of video based advertising and the conflict between TV ads and Internet video ads.  To clarify, it is negative for the major networks and those that benefit from aggregated audience, distribution and ad spending.  For individuals and small companies it remains positive (e.g. a video blogger or small comedy group can make real money).  This may not obvious in the short term.

Newspapers, and presumably magazines, are suffering from the SAME basic problem.  Print ad dollars are drying up faster than online dollars are making up the difference for LARGE PUBLISHERS (NY Times, Tribune, etc. etc.)

Don’t let anyone fool you either.  This is REAL MONEY.  The industry lost billions.

Total advertising revenue in 2007 — including online revenue — decreased 7.9% to $45.3 billion compared to the prior year.”

Do the math.  That’s at least 2.5 billion in ad loses in 2007 to the 2000 NAA members.   That’s 1,250,000 per newspaper.  This includes the GROWTH in online advertising.  At that rate, and it’s accelerating, many companies will have to consolidate and/or get out of business.

For reference in the US, and all these come with some grain of salt:

*Note: This is all REVENUE, not profit.  That’s important because every other category costs a lot more than internet, in most cases.

2008 is not going to be good for most publishers – the advertising market stinks and will continue to stink until disposable incomes come back up and consumers start buying more crap again (tvs, video games, music, new cars).  Online advertising growth will stay flat or maybe slow a little bit as most high margin online advertising is driven by crap (tvs, movies, video games, new cars). Magazines had a nice 2007, but it is misleading as almost all growth is in Medical, Drugs, Health, and Food.  Celebrity obsession rags (People, US Weekly) and general news (Time, Newsweek) are the growth mags because they carry adds for that stuff.  Any mags in tech, tv, or big ticket items are losing ground almost exclusively to online and/or some form of digital.

For more info and justification for above argument see who buys all the ads in print and online. (here’s a combined traditional mediums top 10 list. Also check out more spending lists)

Note though that there may be as much as $3 billion spent in Political advertising in 2008.  This should be taken out of the final numbers this year to determine an apples to apples “size of the ad market”.

THE BIG QUESTION

Why do most traditional print/publishers continue to suffer seemingly without any competitive urgency?

THE BIG ANSWER

Follow the money. Online and Digital are still only a tiny fraction of the money most publishers are taking in.  Most larger print publishers have almost no stake in online and losing 1,250,000 in print is less than a 1% for the top 35 magazines and even less for the top newspaper companies.

The consequences (financial, brand, audience, talent) for not succeeding online for most publishers are not painful enough yet.  It’s going to take another 10 years before the losses in print scare executives into online urgency. By then, though, most of these top publishers will be at the mercy of a larger digital company.

What’s funny though is that the market (VCs, angel investors, acquirers) already see this and only value these print companies at 1-3x annual revenue where their digital competitors go for as high as 7-15x revenue (or in the case of facebook like 150x, hahahaha).  Do you think that means anything to publishers?  Oddly enough, I don’t think it does.

Another Big Question

Ok, so besides lack of financial incentive, what else is going on to keep publishers from being successful online?

Distribution Misunderstanding

Publishers do not control the distribution like they used to.  Large publishers have almost no advantage in distribution.  Perhaps publishers have a disadvantage due to their established workflows, outdated asset management, and obsession with control.

Publishers largely do not have internal knowledge of online distribution.   It’s not likely to change anytime soon either because they are reinforced for that ignorance by the hundreds of online companies that bank on that ignorance and sell them services (Brightcove, Pluck, KickApps…) that will solve their distribution problems with the publisher lifting a finger.  Don’t get me wrong, Brightcove, Pluck, KickApps and the hundreds of cool online tool sets are great and useful.  My point is the large publishers think there’s a magic tool or agent that can buy/generate them distribution online and these companies sell them on that misbelief.

Secondly, most publishers still do not understand that GOOGLE is the newstand, the grocery store check out line, the water cooler, the mail room, the tv guide, the movie directory, the local guide.

Some say Yahoo! has an equal share, but it doesn’t.  Yahoo! is mostly a PUBLISHER.  It receives a LARGE amount (10%+) of its traffic from Google and most of its organic traffic is not in its distribution features (search,video,  directory, maps) but in its mail, stores, forums.  (Remember yahoo gets to count traffic to all of its sub properties like geocities, yahoo stores, news, finance, movies…).

No one Googles for Google.  Google directly has 50%+ of search and indirectly drives 10-30% of the traffic on other MAJOR publishers/portals and 50-70% of traffic to smaller publishers.  Google also owns online video and a huge stake in blogging (the other main distribution mechanisms online)

Getting Google (Youtube, maps, blogger, news) traffic efficiently must be the number 1 traffic activity if a publisher hopes to last online.

Major publishers are horrible at syndicating their content to the general public.   They are slow to embrace mechanisms like RSS, MRSS, aggregators, tag clouds, geoURL, openID, openSocial, etc. etc.  They are slow in getting into the social network and twitter like things.  When they do get in all the good real estate is gone.

In short, traditional publishers are still chasing the belief that they can be original destinations, buy out a corner on the internet and brand equity will carry them.

Productization and Convergence

Print publishers moving online compete in a wider pool than just the other major print publications.  They compete with online only content destinations, social networks, video sites, tv networks, individual bloggers/vloggers.   Publishers are being forced into producing non print content to compete (games, photos, videos, interactives) and they aren’t good at it.  How could they be?  They are staffed with art direction and editors/writers not game developers, videographers and interactive designers.  It’s not bad or good, that’s just reality and the skills required to produce a great print publication do not translate to online.

A large website or web experience cannot primarily be about reading and/or passively viewing photos.  It must involve utility and interaction – search, messaging, mapping, visualizing, sharing, mashing and so on.

A large website cannot contain just its own content.  It must bring together other relevant web connected assets.

Users do not equal readers.  The same user may read offline and use online, but their behavior in both mediums is totally different.

The medium (a computer/pda/phone screen) is not great for long reads (for a variety of reasons).

Websites are not viewed in the same form/layout as they come of the production line.  That is, the publisher cannot control even the most basic design parameters (screen size, font size, screen real estate) it can only optimize for most likely format.

Printers have to produce non print assets and doing so efficiently and compellingly is hard work.  Users expect photo galleries, polls, videos, audio, interactive data visuals.

Online moves at a pace traditional publishers can’t handle in their workflow – publishers pursue perfection.  They have multiple levels of “editing” to make sure every layout and word is correct.  Large websites typically QA on the fly and users are very forgiving of errors (partly because they aren’t TIED to the brand and don’t value perfection over speed and availability).  i.e. NY Times can’t put a BETA on their front page and have a mistake in production.  Websites can and do and get away with it.

Publishers typically don’t have product managers like software companies.  Editors work directly with technologists and its rarely pretty.  Without a central in the trenches head considering edit, sales, layout, design, interaction and so on, a website doesn’t have a chance.

Technology is secondary to editorial in most traditional publishers.  Online TECHNOLOGY is EDIT, EDIT IS TECHNOLOGY.  All the big online companies have tech-edit types.  People who both do code and do content.

and… TECHNOLOGY = EDIT = POWER USERS.  Yup, the success stories online all involve power users who control product strategy and drive content creation almost as much as key employees.

Publishers are very far away from ever letting users to dictate much of anything in their experiences.

And more…

Publishers are a long way away from being able to deliver quality interactive experiences and they aren’t going to be able to license their brands to online properties to fulfill that.  Brands don’t matter as much online OR brands online aren’t as difficult to create as traditional media. (maybe.)

Classifieds, Local Directory and Job Ads aren’t owned by the Papers and Mags Any More

Craigslist, online YP and job search sites stole the print business a long time ago.  We see the damage today done by what started 10+ years.  Without those nearly recession proof ad streams, print has been left with brand ads/national ads which ARE NOT recession proof.

Without these revenue streams to subsidize less monetizable editorial concepts print publications must sell their editorial souls in the form of advertorial. (Don’t believe me? pick up a back issue of your favorite mag or newspaper from like 10 years ago and pick up a recent one.  Lemmeknow what you find… 🙂 ).

In the end, publishers must work harder to attract and retain users and advertisers because the steady classified revenue isn’t there anymore.

Counting Things Hurts Pricing

We compress online ad prices simply because we can count and audit online entities fairly accurately (or perceive we can do so).  Media buyers online count everything and there’s really no way to avoid owning up to the performance of campaigns.  Buyers can count the ads and the traffic it generates.  There’s no loosey-goosey “brand awareness” meta metric.  It’s now, “Deliver me uniques and the right uniques or stop getting my money!”

Run the standard deviations on ad revenue by print publication circulation and you’ll see that the prices do not correlate to audience very well.  There’s some accounting for composition+audience but even that is dubious.  And, no, ad pages (akin to impressions/pageviews online) has almost no correlation either.  See below graph for circulation (x axis) against annual ad revenues (y axis)

Magazine Revenues By Circulation

People magazine is number 1 in revenue but is well behind many other more “targeted” publications for circulation.

Magazine ad sales success is so much tied to quality of ad sales team, existing relationship, agency perception, ease of working with the company and other “soft” qualities.  Add in a fair amount of “we buy print because we’ve always bought print.”  It is not about Ad Impressions, Ad Performance, nor Direct Transactions Generated.
Newsprint prices are also localized in some since.  If you are the only paper in town and you own circ in that town, you can raise the price.  Online doesn’t have that restriction.  The ad prices are normalized more universally.

Put it all together and online ad prices will never reach print rates.  People magazine makes almost a billion dollars on a readship of less than 5 million.  Facebook and MySpace reach over 50 million people at least 10 times a month and don’t do that kind of money (Myspace might be close).  Look at that difference!  10x the audience…

Methods of counting print and online are so different most print companies have trouble making sense of both and weaving a cohesive story for advertisers.

What Can Publishers Do?

Nothing different, really.  Or rather they will do what the consequences dictate.  A lot of money will be lost by some companies and a lot of individual people will get left behind over a long period of time.  Advertising will grow and advertiser options will diversify.  The pool of dollars available as a publisher will increase, but the amount of spend they land will not keep pace with the growth of advertising over the long term.  That is, more publishers maintaining a smaller pieces of the pie.

Individual creative types and developers will continue to flourish as long as consumption increases (which it will and always has.)

Those willing to experiment before their financial sheets bully them into doing so should do so aggressively.

They should spend the considerable slushfunds generated from high print revenues on HIGH VALUATION online properties.  A dollar spent in online goes much further than that same dollar in a magazine or newspaper.  Excelling in interactive production requires experience and practice.  They need to spend the money now so that in 5-10 years the have experience beyond writing, layout and photography and have command over the various distribution opportunities.

Publishers should acquire start ups now.  Use that cash to buy highly valued fast growth companies before their valuations and user bases. sky rocket.  Aggregate the digital talent before Google and MicroHoo get it all…

Again, doing this will betray the financies in the short term.  Luckily in 2008 a publisher can hide experiements and acquisitions in soft ad market conditions.  🙂

For Advertisers

Spending more online would be a GOOD IDEA, especially in 2008.  The ad rates are going to fall out and you can get huge chunks of good inventory very cheaply.  Most video and rich media inventory is probably sold out at less than 30% internet wide, meaning there’s a steap discount on inventory now.

Plus your ads can reach 10x more people at a lower cost than full out print campaigns.  (I know, I know, certain demographics are in print, not online… bah! even AARP.org has over 2 million UUs per month!)

Besides the obvious pricing benefits and reach increases, you creative will be cheaper to create and easier to deploy.

To prove my point I propose a challenge to any agency, ad exec, or brand manager:

Give me half of your print/tv/radio budget for a particular product, service or content franchise.  You keep the other half.

I bet, over a one year period, I can drive more revenue and profit with online than you can with traditional media.

Not that I wanna do your work for you… 🙂

~R

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This is a very cool blog.

This post, a summary of collective behavior research, is a nice follow up to my last few posts.

 I also happened into this visualization of voter behavior from the last presidential election.  It would be fun to extend this into specific issues but it’s pretty clear that consequences shape behavior and how their are different consequences by context (economic status, population density, university density, high mover index, etc. etc.).  What’s hard to figure out from a one year snap shot are the schedules.  How much does this map shift by person/family if we look at the same sample over 20 elections?

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Observe this graph of Google search traffic by the remaining candidates.

Blue is Barack Obama, Red is Hillary Clinton, Orange is John McCain

Google Trends for Barack Obama

The spikes all correlate with voting days or the day after.

I have nothing profound to say other than it’s pretty interesting that the days when tons of people seek info is after the die is cast.  It reminds a lot of the behavior we see in retail and ecommerce – in many product categories people are more likely to visit a retailer website AFTER they have made a purchase (confirm value of purchase, sink deeper into buyers remorse..). Companies spend a ton of money figuring out why people abandon carts, which isn’t actually what’s going on.

~R

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I received the following from a director of ad operations, Jeremy Jones, in response to yesterday’s post on collective behavior and the other day’s post on vertical media.  His remarks focus on the confusion over social networking advertising (both selling and buying).  I include the full remark here and an annotated remark below.

[Social networks/social sites] struggle with how to sell the concept to advertisers.  No one gets it, not even the sn sites themselves.

I had believed that social networking and behavioral targeting was just a fad.  That it will end up just being another tool in the arsenal once somebody actually figures it out.  I think it won’t really take off until someone develops a standard that everyone can follow.  Until then it’s just a mishmash of technologies and ideas that are just tangents of the same idea.  Being in the industry, we hear about every new concept of trying to aggregate behavior and bucketing those behaviors to try and create useful targeting.  It all revolves around collecting site behavior.  Some of the more interesting ones actually involve trying to apply psychological profiles and social classifications based on the user’s browsing behavior.

Is sn or bt about the consumers or the influencers?  Up to this point, anyone trying to use influencers has typically been exposed.  All those attempts at viral are quickly uncovered as manufactured.  It is true what they say that the internet is the world’s greatest laboratory.  The collective intelligence will typically uncover a insincere effort rather quickly.  SEO has generally been regarded as a good thing.  Even though it has been used by every advertiser to increase their influence.  It has ensured that any content worth knowing can be found.  But what about social networking and behavioral targeting?  The impact of social networking is just beginning to be felt.  So much personal data.  Will the collective eventually see this as a good thing or bad?  It’s influence will be far greater than SEO.  Will they approve of having their personal details used for the purposes of a more efficient marketing machine?  Can they do anything about it if they really wanted to?

One of the current problems with behavioral targeting is that no one has developed a method of success reporting.  What is a success metric for a bt campaign?  Advertisers are still using visits and clicks as success metrics.  Widgets is an interesting method.  It requires adoption by users, and once adopted, do they interact with your widget?  Consume it’s content, pass it along to friends?  Do friends adopt it without prompting?  It certainly opens up a whole new area of measurable behaviors that were never available before.  This gets back to the influencer vs the consumer.  How do you target the influencers?  Heck, how do you identify the influencers.  That, I believe is the tricky part.  The influencers are not a stable group.  They are never the same.  They can be an influencer one day, and an consumer the next.  If you could come up with a method for identifying the influencers for any advertiser then you would really have something.

I think this response underscores the general discomfort with media and advertising right now.  We have the technology to deliver interesting experiences and we collect a lot of data.  We simply don’t have a good enough technology/science of behavior that has left the ivory tower and trickled into business intelligence.

We focus too much on the “biological details”(e.g. who are the influencers, where’s the meme/viral agent/contagion, what is the makeup of the content, onbrand strategies) that we’re losing site of the behavior, in particular the social behavior.  We do not need to know much about the influencers to take advtange of influencer behavior (what are the behaviors, what are the schedules of reinforcement, what are the reinforcers), history (normative behavior, rule sets, discriminant stimulus) and the context of the influence (the environment, the websites, the office, the watercooler, the telephone…).

Here’s my direct response to Jeremy:

[Social networks/social sites] struggle with how to sell the concept to advertisers.  No one gets it, not even the sn sites themselves.

“It” needs definition.   The confusion may stem from unclear values and how to measure achievement of that value.  What do advertisers value?  Transactions?  Clicks? User data? Sales?  “Brand awareness”?  Being hip/cool?  Often advertisers use buying agents (agencies, buying teams, their uncle…), so the values are compounded.  The buying agent may value sticking to budget, being hip, being secure…   The confusion in measurement for media and advertising has partial roots in what the bigger financial market (venture capitalists, board members, stock market/shareholders, banks/lenders) value. Do the financiers value media footprint (eyeballs), transactional value (CPMs), advertising market ownership (spend share), loyalty (repeat spends, repeat users)?   When you look at the two value sets and try to assess whether the social networking sites fulfill any combination/which combination you find that social networks are out of whack with mainstream values.  Social networks drive huge footprints and user loyalty and are good at exposing users to brands/ideas/concepts. Social networks have yet to drive transactions or any offsite activity so most of the values to advertisers with the current advertiser approach cannot be fulfilled.

Don’t forget to add the set of rapidly changing distribution mechanisms (the APIs, social networking platforms, ad implements, publishing toolsets, scripting languages, AJAX vs FLASH vs Silverlight, the tracking systems…)

Thus confusion.

Resolution?  Experience.  That’s it.  Everyone will gain experience and we’ll integrate social networking advertising and not even notice because their will be some other “new thing” chewing up attention on blogs and at water coolers.

I had believed that social networking and behavioral targeting was just a fad.

A common response to an unknown stimulus.  Until you experience new methods enough, everything we don’t know about is a fad.

That it will end up just being another tool in the arsenal once somebody actually figures it out.  I think it won’t really take off until someone develops a standard that everyone can follow.  Until then it’s just a mishmash of technologies and ideas that are just tangents of the same idea.  Being in the industry, we hear about every new concept of trying to aggregate behavior and bucketing those behaviors to try and create useful targeting.  It all revolves around collecting site behavior.

Right, see my note above.

Some of the more interesting ones actually involve trying to apply psychological profiles and social classifications based on the user’s browsing behavior.

Pyschological profiles?  ugh.  It’s behavior that matters.  The psychology, in typical usuage, is a useless abstraction.  As a thought experiment, profile yourself.  What’s you profile?  Another experiement: Go to your amazon.com page – based on the products you’ve purchased and they recommend, what does it really say about you and can you do much to target yourself that you couldn’t do by matching like categorized products that get ok user reviews?

Behavior classifications based on schedules of reinforcement,with historical and contextual classification is the way to go.  Read up on schedules on reinforcement to understand the concept and how it might be applied to online advertising.  Basically, a publisher needs to understand rates of reinforcement and what schedules a user behaves under.  You can have the perfect product and a great message but if you miss a users schedule, they won’t buy.  Schedules can be:

  • buying schedules
  • reading schedules
  • relationship schedules
  • job schedules
  • cultural schedules
  • learning schedules

One topical example that might help understanding. Think about this years elections and why the candidates might be having more success with their platforms vs. in previous years.  The voters schedules are inline with some politicians message.  The context of economy, health care, unpopular war, social upheaval, housing issues are both on social schedules/cycles and personal cycles.   Certain politician presentation styles and stance on these issues fit better in the current schedules than others.

Your own schedules impact how you vote and how others might influence your vote.

I suppose you could say “timing is everything.”

Is sn or bt about the consumers or the influencers?  Up to this point, anyone trying to use influencers has typically been exposed.  All those attempts at viral are quickly uncovered as manufactured.  It is true what they say that the internet is the world’s greatest laboratory.  The collective intelligence will typically uncover a insincere effort rather quickly.

Is there a difference between consumers and influencers?  and does the exposition of that difference matter at all?

Authenticity and credibility are very much tied to values.  A manufactured attempt a buzz is usually the result of the manufacturing body not understanding the values of the consumers. Often agencies, marketers and publishers get the optics (the outside packaging) of a product or service but totally miss the utility. (hint: ipods are much more than music on the go with a nice digital store)

SEO has generally been regarded as a good thing.  Even though it has been used by every advertiser to increase their influence.  It has ensured that any content worth knowing can be found.

I suppose.  A sidenote: SEO was also a product of the search companies themselves to improve their own product.  The better content can be found the more useful the search engine.

But what about social networking and behavioral targeting?  The impact of social networking is just beginning to be felt.  So much personal data.  Will the collective eventually see this as a good thing or bad?

It’s neither good nor bad and will never be labeled as such.  It’s all about value.  You give all your professional data to LinkedIn and Monster because they help you get a job, you do not always share this information with your land lord because he might use it against you.  You give your friends names to Facebook because it helps you communicate.  You give google all of your search queries because it finds the info you need, but you’d never share your search query list with your girlfriend – you’d have far too much explaining to do.

It’s influence will be far greater than SEO.  Will they approve of having their personal details used for the purposes of a more efficient marketing machine?  Can they do anything about it if they really wanted to?

Social networking traffic is different than search traffic.  It’s not greater or lesser in any quantifiable sense, certainly not yet.

Yes, you can do something about your data.  Always.

One of the current problems with behavioral targeting is that no one has developed a method of success reporting.  What is a success metric for a bt campaign?  Advertisers are still using visits and clicks as success metrics.  Widgets is an interesting method.  It requires adoption by users, and once adopted, do they interact with your widget?  Consume it’s content, pass it along to friends?  Do friends adopt it without prompting?  It certainly opens up a whole new area of measurable behaviors that were never available before.

See my earlier notes on the confusion of values.

This gets back to the influencer vs the consumer.  How do you target the influencers?  Heck, how do you identify the influencers.  That, I believe is the tricky part.  The influencers are not a stable group.  They are never the same.  They can be an influencer one day, and an consumer the next.  If you could come up with a method for identifying the influencers for any advertiser then you would really have something.

My focus is on coming up with a way to track, analyze and respond to schedules.  If I know your schedules, I don’t need to know you.  Tracking schedules doesn’t require demographic studies or surveys or other intrusive methods.  I can use the behaviors you exhibit.  The web is excellent for this.

My point is that I can spend time classifying people into various categories by gender, “personality”, social status in an effort to predict behavior OR I can just observe the behavior and schedules and attend directly to that.

~R

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There’s a remarkable feature on Edge.org.  I point it out because it’s robust dialogue about collective behavior.  In particular, the discussion is decidedly not casual agentish, mind-body dualist nor monocasual.  Dr. Couzin is refreshing!  His approach ties very well to analysis of media (collective behavior!)  (Read his other stuff like this essay, too!)

how can a colony decide between two food sources, one of which is slightly closer than the other? Do they have to measure this? Do they have to perform these computations?

We now know that this is not the case. Chris Langton and other researchers have also investigated these properties, whereby individuals just by virtue of the fact that one food source is closer, even if they are searching more or less at random, have a higher probability of returning to the nest more quickly. Which means they lay more chemical trail, which the other ants tend to follow. You have this competition between these sources. You have an interaction between positive feedback, which is the amplification of information—that’s the trail-laying behavior—and then you have negative feedback because of course if you just have positive feedback, there is no regulation, there is no homeostasis, you can’t create these accurate decisions.

There’s a negative feedback, which in this case is the decay of the pheromone, or the limited number of ants within the colony that you can recruit, and this delicate balance of positive and negative feedback allows the colony to collectively decide which source is closest and exploit that source, even though none of these individuals themselves have that knowledge.

Great exposition on the web of contingencies and the feedback loops capable of reinforcing complex behavior that we typically claim is “free choice” like or conscious decision making.

One of the big challenges that still remains, and one that we’re beginning to address—I’m not saying it’s a new question; I’m not saying people haven’t addressed it—is the level at which selection is acting within populations. The view of individual level selection, and selection at the level of genes, of course, holds. But if you consider, say, a school of pelagic fish—these large schools that make these dramatic maneuvers—the individuals are unrelated to each other. They drift around as pelagic larvae, so when their schools are comprised as adults, they’re completely unrelated.And yet the individuals’ functioning is entirely within the context of these schools; you can see the integration of the behavior when they are attacked by predators, you can see why in the ’40s people thought there must be thought transference, must be telekinesis, because of these remarkable maneuvers. We now know that these maneuvers are created by the relatively local interactions among the individuals. But if you take an individual, say, a herring, from the school and isolate it, it will die of stress.It is a bit like taking cells from your body—when you take them outside the body, they are unable to function. Of course it is not as closely integrated as a body, it is not as closely integrated as an ant colony. But there is this high level of integration among unrelated individuals. And in terms of how the genes are going to propagate, genes that allow individuals to function collectively as a group are going to be extremely important. So one has to then begin to think about the level at which selection is actually functionally acting. There is nothing new in terms of the genetics here, but it just in terms of how you begin to understand how the collective behaviors emerge and evolve within these types of systems.

Yes! Selection by consequences. Selection happens at many levels – genetically, epigenetically, and behaviorally.  This is a clearer and more accurate description of collective behavior than some previous discussion on edge.org.

It doesn’t stop there though.  Dr. Couzin reminds us yet again observed behavior emerges from simple, often unexpected, contingencies.

Another example that we’ve been investigating arehuge swarms of Mormon crickets. If you look at these swarms, all of the individuals are marching in the same direction, and it looks like cooperative behavior. Perhaps they have come to a collective decision to move from one place to another. We investigated this collective decision, and what really makes this system work in the case of the Mormon cricket is cannibalism.

You think of these as vegetarian insects—they’re crop pests—but each individual tries to eat the other individuals when they run short of protein or salt, and they’re very deprived of these in the natural environment. As soon as they become short of these essential nutrients, they start trying to bite the other individuals, and they have evolved to have really big aggressive jaws and armor plating over themselves, but the one area you can’t defend is the rear end of the individual—it has to defecate, there has to be a hole there—and so they tend to specifically bite the rear end of individuals. It is the sight of others approaching and this biting behavior that causes individuals to move away from those coming towards them. This need to eat other individuals means you are attracted to individuals moving away from you, and so this simple algorithm essentially means the whole swarm starts moving as a collective.

I mean, really. Think about this… how different is human behavior? (I know, I know, it’s more complex, but…).   Consider the elections, consider online behavior, and consider office politics.  We move towards what we move away from and then you get this behavior that appears collective.  Perhaps in our rush to be anti-brand, unique, a cut above, a stand out, we all come together????

In the human sphere it takes us a great deal of effort and complex cognitive abilities to decide what to do if we are going to decide in a collective. What we can now show is that animal groups, with really simple cognitive powers, can actually perform these types of computations. What we now want to understand is under what conditions these types of cognitive capacities work. How can these animal groups take information from multiple sources; how do they filter out noise and yet amplify weak signals?

Right, we should get some data to back that up!  We are on to it…

Second idea that is interesting is one reason I’m interest in NKS Summer School – simple rules applied over and over and sometimes compounded can generate very complicated behavior.  Sometimes the behavior is so complicated we’re inclined to model it with complex rules.  I want to explore this in depth and showcase it visually.

Dr. Couzin makes a great case for why the study of behavior is key to understanding.

The locust is one of the best-studied organisms for physiology and neurobiology. It is really an amazing model system for looking at these principles. Yet the last time people looked at the swarming behavior of locusts in the lab was in 1954. So there is this dearth of information, and no matter how much you look at a locust, and how much you know about the biology of a locust, you cannot predict what will happen when you start to put these organisms in swarms. …. Issues like the dimensionality of the problem are important; issues such as certain details of the interactions are not important if you want to understand the general principles of how it changes—the phase transition is very important for us in the case of locusts because, as everyone knows, locusts are always around. But then suddenly there is this transition from one state to another almost liquid state—so its driven liquid-type state—where the swarms can become enormous.

He, too, arrives at a similar curiousity in the application of these abstractions to the study of media.

Individuals can have a certain opinion on certain topics, and we can allow individuals to interact across a social network, and of course the social network’s topology is partly defined by what opinions you have. You tend to interact more often with people who have similar opinions to yourself because you are more likely to meet them in your sphere of life. But interacting with people can change your opinions, which can then change your social network, which can change your opinions, so again we have this recursive feedback. And so we are using it to explore these types of properties?I am sure that these types of principles also would apply to understanding dynamics on the Web.

I know there’s some excellent work by Duncan Watts on how individuals buy on-line, or how they judge information that they have on-line, how your judgment of something is dependant on what previous people have said about it. What they used was an on-line music store, where you either have information about what previous people have thought about a song, or you have no information and you just have to rank the song without that previous buyer. This strongly changes people’s behavior because of course when you see what other people have been doing, you can have this autocatalysis, this positive feedback. You can tend to buy into that because you have seen other people do it.

Yes, like so many of my posts, we’ll leave with a simple take away:

We are constantly looking for areas where we can create a more data-driven science behind the spread of these normative behaviors.

And maybe this constant looking is also a spread of a normative behavior?

~R

p.s.
For info on Duncan Watts weave your way to his Kevin Bacon paper and his take on online music/social trends.  You may want to hit up his wikipedia page for more links.

And Yahoo! research, where he works, has some kickass concepts, publications, apps.

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How convenient!  Slashdot had a lead post about Google ad patents and these patents are all about behavioral targeting.

19. The computer-implemented method of claim 18 wherein actions of the user monitored are selected from a group of user actions consisting of (a) cursor positioning, (b) cursor dwell time, (c) document item selection, (d) user eye direction, (e) user facial expressions, (f) user expressions, and (g) express user topic interest input.

A few other posts around the web lead to other coolish behavior based ad information.

One key aspect of behavior based anything – you need computing power.  lots of it.  This is yet another reason most vertical ad networks, targeted publishers and standard marketers can’t really do behavior based, uber effective advertising campaigns.  They simply lack the raw horsepower.

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Today a little bit of a spat broke out about Federated Media and Glam.

John Battelle wanted to make a general statement when specific ones can easily be made.  Most of these vertical ad networks and vertical ad plays stink.  They aren’t good (or any better than anything else).  They aren’t special for the user, the publisher, nor the marketer.

Why?

They aren’t based on behavior.  Most of the targeting and site rollups are based on the terrible panel based demographics and some lame content classifications.  The ad implementations, as John clearly points out, are based on IAB standards – i.e. not behavior.  Unfortunately for John’s argument his company, Federated Media, has the same non-behavior “targeting/verticalization”. He’s got all the tech sites.  That’s not different than Glam.

Recalling the heyday of magazines and cable is hardly a step in the right direction either.  Why?  None of those mediums could deal directly with behavior.  Sure, they influence behavior, but they are mediums that cannot be conditioned in return.  The mags and cable (broadcast in general) depend on a shotgun blast approach.  They have to get in front of you at every newstand, every tv, every checkout lane.  They have to blast you with house promos, drop cards, and numbing outdoor campaigns.  All the ways they had/have to attract you to the content (and ads) is non-responsive, non-personalized.  Luckily these mediums can spend a ton of cash to blast you into readership, viewership and mass appeal.  It’s tried and true, but very expensive.

In short, those experiences aren’t the internet. 

The ad rates weren’t based on the performance of the 2 page ad spread nor any other verifiable metric.  Brand Perception and marketed readership/viewership and sales connections sell those ad rates.  Powerful facets then, powerful now.

Guess what?  The internet doesn’t have mega-brands and most sites ad rates are based on hard to juice metrics (so many ways to verify actual traffic and interaction.).

I do believe high CPM rates are possible.  Integrated experiences built around schedules of reinforcement (conditioning, rewarding, reinforcing) the user and in return other users, editors, the site and so on are worth the money.  These experiences are usually not standard across sites – how can they be?  They need to specific to the service!

Alternate reality, iphone apps, immersive game worlds, user to user games, recommendation ads, mystery games, scavenger hunts, interactive novels…

Note: The only mass market / standard ad that is loosely based on behavior is search ads due to Google’s massive optimization and bidding engine.  The system (prices, creative, number of ads, etc.) morphs constantly to what’s going on and the ads are nearly ubiquitous so they follow the user (reinforce them) regularly (schedules!).

So what’s the next mass market behavioral advertising option?

The next behavior based ad ecosystem is the social network.  Some don’t think its there yet. I disagree.  The social networking apis and the resultant applications are the behavior based ads.  Facebook/MySpace/Hi5/BeBo don’t make money from them yet, but plenty of publishers do.  These “apps” are far more interesting and robust than the ads most agencies, media buyers and marketers stage.   It’s too bad that more brands, companies and products that depend on massive marketing don’t take advantage of these more.  If some of the big companies spent more of their considerable resources on building interesting apps and services, they’d get so much more out of it than the easy to do but usually worthless online ad campaigns and these tired vertical ad networks.

What’s the hold up?

There are a whole set of contingencies preventing online marketers from doing more and running campaigns behaviorally.   Knowledge of behavior, solid analytical approaches, technical skill, time, bucking the system… and more.

There’s simply not enough knowledgeable, creative, competent talent to go around.  And, now, it’s no longer all aggregated at the big five agencies and the big five consumer product companies.

In the heydey of print and broadcast, there weren’t as many variables to pay attention to, not as many options on how, where, when to spend your ad dollars.  There wasn’t even as big an ad market.

Ad budgets are growing, certainly, but not enough to give a growing amount to every publisher, every broadcaster, every newspaper.  TNS predicts a 4.2% US ad spend increase from 07 to 08.   That’s about $340mil extra to split among the cable, network tv, radio, newspaper, magazines and internet options.  Let’s say only 340 new ad outlets become available in 2008 (new websites, cable channels, new magazines, etc. etc.).  That means the only $1 mil for each one of these, assuming existing options don’t grow.  Exactly… ad dollars per publisher, on average, is going to go down over time.

With each publisher getting a smaller slice of the ad pie, they have less money to help marketers try interesting things.  Smaller budgets don’t reinforce greater effort. Less effort doesn’t encourage repeat business.  The free third party metrics sites erase the advantage of heavy hitting sales people.  The rapid trading of talent gives everyone access to the same ideas, same approaches… and so on.

All of this normalizes the options.

Now what?

Rarely do  standard approach turn into a runaway success.  On average, standard approach get standard results.

Vertical sites and vertical networks – most are standard fare.   The High CPMs aren’t going to go to standard fare. The people who can afford high CPMs typically value non-standard options.  Publishers who want high cpms need to put in the effort to develop behavior based experiences.  Users habituate quickly to standard approaches – pattern interrupts are key to engagement. As such, there’s no advantage to advertising in a vertical ad network.  The vertical ad networks exist for the benefit of the publishers, not the users.  Many publishers don’t want to sell their own ads so they let someone else do it.  Turning to a vertical ad network main help run out a budget, but no one has published any data to suggest the performance of vertical networks does any better than advertising on Google.  (why?  well, one of the main factors – most of the vertical sites targeted get 40-80% of their traffic from Google via SEO or SEM.  🙂 )

No, really, now what?

Argh, so much to write about….not enough time!

I’m going to pull out some killer ad campaigns/integrated media as a showcase.  Do you know of any behavior based/game changing ad executions?

~R

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