Archive for March, 2009

Please listen to this file. It’s called the Shepard Risset glissando.  It’s very unnerving to me.

If I were to put sound to  various cause and effect data trails from complex systems (like human behavior), I imagine it would sound a lot like that.

  • What is the cause/are the causes and effects of human behavior?
  • is stimulus a cause?
  • is it an effect?
  • can a behavior be a reinforcer at the same time as being reinforced?
  • Are schedules of reinforcement causes AND effects?  are they exhausted from the behavioral system as much as they are determinants?

Perhaps these questions are just Saturday afternoon philosophical/blog musings.  However, I do think the strange loopiness of animal behavior (humans in particular) is what makes almost all models of behavior inconsistent and mostly wrong.  Or maybe just my understanding and application of them is wrong.

I have another question.  Human memory is not like computer memory.  it’s definitively fuzzy… so…

is there a difference between remembering  the past inaccurately or predicting the future inaccurately?

in both cases aren’t we just modeling context/situation/filling in details based on limited inputs?

and the biggest question is… DOES ANY OF THIS HELP UNDERSTANDING?

for fun, more about strange loops here and here.

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Update 3/29/09: Danny Sullivan correctly pointed out to me that he is a publisher and an advertiser.  I’ll disagree on the idea that he is a “real user”, by which I meant “regular user”, because he is not nor I am.  We study websites, traffic and human behavior – we notice and ignore and react to things very differently than a user just flying by to get the latest news and views.  I do agree with Danny that my argument mostly matches his… thus, I’m only calling out Clemons argument.

Update 3/28/09: Techcrunch keeps stirring this up.  Now Danny Sullivan replies…

The most damaging part of both of their arguments is that neither one is arguing Clemons original argument and rebuttal mostly fail to convince his claims about the death of Internet Advertising.  He’s conclusions don’t match actual data and experience from the perspectives of an advertiser, a publisher nor really a regular user.

These points are not defensible without real data:

Users don’t trust ads
Users don’t want to view ads
Users don’t need ads
Ads cannot be the sole source of funding for the internet
Ad revenue will diminish because of brutal competition brought on by an oversupply of inventory, and it will be replaced in many instances by micropayments and subscription payments for content.
There are numerous other business models that will work on the net, that will be tried, and that will succeed.

In fact, let’s consider some counter examples:

Someone sold 4 million Snuggies based on ads.  Did the people who responded to those ads not trust the ads?  Their behavior shows they did enough to fork over $15 bucks for a blanket with holes in it.  The better statement is some users don’t trust some ads.

Users do want to view ads.  Millions of people love superbowl ads and actually seek them out online and on their TIVOs.  Online only ads that people do want to view include the millions of mini games they play, youtube videos they watch, contests they enter.  A better statement is that some users to want to view some ads, especially when the ads are not engaging, useful or catchy.

Users do need ads.  Search engines and social graphs can only show you information about things that are already popular/reached tipping point.  They cannot show you stuff just coming out of the labs.  Users need ads to learn about new and different products and services.  And the only way to introduce people to new things is put new things alongside already known things.

Ads are not the sole source of funding for the internet. Anyone who is claiming this is what web companies think clearly has not really studied the industry or worked at a web company and/or companies that extensively use the web in their business models.

Ad revenue will continue to grow in the long run.  As long as businesses need to sell more product, more ad revenue will go into the market.  The difference is that the ad spend is spread among more and more entities, so individual businesses will get less ad revenue.

Many other business models already work. and more will be created.  Selling apps, selling computer time, renting server space, selling subscriptions, donor models, barters, licensing, premium access…. I mean, gosh.  I don’t think we lack for business models that work.  The media is simply pointing to the high profile failures of big media companies that haven’t figured out to how to shoehorn it’s model into the internet way of doing things.

Once again we see that pundits rarely represent the real story.  They don’t know the price of milk. Just talking to people in the industry and summarizing the conversation is not enough to predict the end of online advertising.

See below for rest of my original response.


Despite the impressive length,  a recent TechCrunch guest feature on the failure of internet advertising fails to reveal what’s really destroying the ad model online.  Clemons neither states what he claims is actually failing and doesn’t really prove it is. Alas, I will still attempt to refute the possible implications of his claim.

It is not a particularly insightful observation that “The problem is not the medium, the problem is the message, and the fact that it is not trusted, not wanted, and not needed”. Of course people don’t like being distracted with ad messages.  That’s always been the case, that’s why marketers have to pay for ad placement.  Nothing new here.

Advertising itself is not broken nor will ever go away.  As long as companies have products they need to push into market, they have to advertise, regardless of nature of the medium.  Play with the language and state definitions all you want – advertising will always be a part of our lives and media experiences.

What’s wrong with the business models of sites that rely on advertising is the pricing, not the actual idea of advertising.  Spending in terms of dollars is down in all mediums, certainly.  However, the amount of advertising we’re exposed to is likely still growing.   I have a long post on all sorts of data points on this topic here.  The short of it:  marketers have a growing number  advertising impressions out there, everyone know’s how well they perform and thus the pricing is coming way down from the relatively overpriced “older” advertising models in print, radio and tv.  This shrinking pricing model puts pressure on the business from a margin standpoint and so the less efficient businesses fail.

Yes, I generally hate banner, text, billboard ads and neon signs like everyone else. Except when I don’t.  And when I don’t that’s valuable to the company that paid for that placement and it’s valuable to me to be notified of something I might have missed.  We’re just arguing price.

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From an Invited Guest Author: Ron Williams…

Republican Party is disintegrating. In many ways this is unfortunate. I have read the Republican Party platform and I find that I can agree with many of their positions, such as immigration and fiscal policy. Also, their platform position on personal responsibility resonates with me.

However, the disintegration of the Party does not come from its stated platform, but from its politics. It amazes me how political the Republican establishment has become. The Party must be judged not on what it says but rather what it does. And what the Party does, is practice a set of politics which is self destructive and, in a very real sense, un-American. It is clear to me that the Republican Party is doing all it can to see that the country does not emerge from the current Recession in an orderly fashion.

It seems the Republican Party is hoping the country in fact does fail to recover, so that they can say, I told you so. I find that position to be actually un-American and, in many respects, traitorous. The Obama administration has been in office less than two months, and the Treasury Secretary in place an even shorter time than that, Yet the Republicans are already “harping” about a failed administration and a failed Treasury Secretary.

We are in a war, an economic war. To actively work to cause the country to lose that war should be seen as an act of traitorous behavior. If the Democrats had worked as actively against President Bush in his pursuit of the Iraq war as the Republicans are actively working against President Obama in this economic war, the Republicans would have gone ballistic in their attacks. We should all go ballistic in our attacks against Republicans for their current behavior. They should be rewarded by losing even more seats in the next round of elections.

Some in the party have an inkling their problems are and are trying to address these problems by looking at their platform and by looking at new ways of selling this platform to middle America. However, this effort is going to be stymied by the far will right wing of the party which is dedicated to its right wing issues and will suffer no dilution of their message.

At first blush, You would think there is a struggle for the heart and soul of the party, but that is not really the case. There is no question that right wing of the party will prevail. And the party will therefore remain a collection of Grumpy Old White Men (GOWMs), with a sprinkling of a few women and a minority here and there. Further, these GOWMs seem to really lament the changes that are occurring in this country. It is becoming younger. It is becoming a multi-cultural society, with no single group as a majority. It is becoming a society where women will play a leading role. It is becoming a country where the natural order is being turned on its head.

I would suggest that this change in the natural order is causing them tremendous heartburn. But what makes matters even worse is their current failure to have developed any serious solutions. In response to the every problem facing this country it was clear that their one and only solution is tax cut. But not just tax cuts in general, tax cuts for the wealthy. Their mantra appears to be if you cut taxes for the wealthy it will free up money to allow the wealthy to buy equipment, buy materials and higher new employees. The problem with this mantra is that it has been tried for the last eight years, and it has helped to bring us the current fiscal disaster. All of the Republican actions have been shown to not work. And it appears the party is not prepared to change its positions. Therefore, I believe the Republican Party is in a disastrous state, but because of its mind set its actions would not change and the party will continue to disintegrate. That is too bad, because we do need at least two parties to keep things in balance. It just appears that the second party is not going to be called Republican.”

Ronald Williams


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In human interactions, there’s nothing like an enemy – a casual face to a problem.   With AIG, the outrage at the bonuses is hitting a high fever pitch.  In fact, the outrage is seemingly out of whack for the offense versus far more costly and troubling issues like Health Care, the entire bail out situation, public school system failures, and ending the war/getting out.  Where’s our outrage on those bigger, costlier issues?  Why is it not as great?

There’s no one to blame.

With AIG, it’s easy.  Point your fingers at the big bad execs who took the bonuses and/or gave them out.  Those are the bad guys. Right?

What I can’t figure out yet is WHY we need to have an iconic enemy.  Why does having a face to a problem seem to spur stronger reactions?

Or, maybe this is just my own bias.

Must think on this.

However, I still find it very inconsistent that people are this concerned about $165 million when we’ve blown $2 trillion and still haven’t handled some pretty important issues.

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Across all mediums, advertising $$$ is off 2.8%.

Of course, this is in line with the overall economy so it’s not totally surprising.  Advertising typically lags because the budgets go in so early into the spending season.

A recession in ad spending that goes well into 2009 is going to crush many an Internet company, more than a few agencies, and a lot of traditional media companies.  Oh, by crush, I mean put them out of business for good.

Unless you work on the ground in the advertising world it’s hard to understand just how devestating the recession is especially when consumption of media will always be going up.  That means there will always be more supply of advertising impressions and the cost of media businesses are NOT coming down.  With the ad spend so far down, the prices on this oversupply of inventory is highly depressed further adding pressure to a broken model.

Many people ask me what I think then is going to work with media companies… well, I’ve said it before… media companies have to SELL SOMETHING REAL, not just ads.  Not just an impression.  Sell DVDs, sell shoes, sell licenses, sell special events… anything.  The ad rates simply will not cover the costs of running these media companies.

Oh, and if we thought 08 numbers were bad, just wait for q1 2009 when we will see the real effect of ad budget cuts.

Yes, I’m being a bit DoomsDayish.  Because there’s not a lot of runway left for folks and if they aren’t finding a strategy to cope by now, game over.

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What seems to be missing from a lot of online business models is the balance between function – does it work – vs. perfect – is it best of breed/do everything you ever wanted/beautiful.

It might be alarming to some, but functional is always better for a business.  Perfection is too costly for 99.99% of the businesses, especially start ups.

Most of the bells and whistles I see Internet media folk put on stuff are completely worthless to the function.  Avoid this at all costs.

Maximize this statement:  what is the least amount of energy we can expend to generate the consumer behavior we desire.

After a product reaches critical mass, then you can spend lots of time eeking out perfection and small gains.

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An interesting approach to knowledge mentioned in Stephen Wolfram’s blog:

But what about all the actual knowledge that we as humans have accumulated?

A lot of it is now on the web—in billions of pages of text. And with search engines, we can very efficiently search for specific terms and phrases in that text.

But we can’t compute from that. And in effect, we can only answer questions that have been literally asked before. We can look things up, but we can’t figure anything new out.

Let’s see where this goes!

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If you were ever wondering what it really means to have car sales numbers off each month by 40%+ for the last 6 months, visit this unique pictorial.

[credit for finding the pictorial goes to my east coast insider, mindbender (visit his link for something strange) ]

These visuals strike a unique chord that numbers in the WSJ simply cannot.  Compare the CHART to the massive full car lot.

Auto Sales Charts

Auto Sales Charts


Full Car Lot of Unsold Cars

Full Car Lot of Unsold Cars

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This is a pretty useful data dump from Google’s CEO

Economic situation pretty dire. Combination of what we’ve seen does not appear to have a bottom. People are using the Internet more. Obviously will affect online ad market because our systems are so tightly tuned. It will eventually be reflected in CPC, CPM. We are not immune to this. We may be better positioned from ad perspective, but ultimately the real pain felt by companies worldwide will sometime translate to our world

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Do you think President Obama and his administration proposed the largest deficit in history by far to improve the chances that a meaningful budget will get through eventually?

That is, as is often done in business, has Obama spit out something at the highest budget levels knowing that opposition will ask for compromises and cuts and only go with something once they cut enough flesh?

It doesn’t seem implausible to me that one might want to come out with a preposterously big proposal so that you can lose 25% in negotiations and still have a usefully large budget.

Really when you look at the estimates, factsheets and assumptions powering the media behind the budget  – everything does read like a typical MBA-built business plan – it’s all up and to the right where it needs to be.

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