SLOW Movement

NY Times: The Science of Managing Search Ads

December 22, 2009

The Science of Managing Search Ads

By MIGUEL HELFT

MOUNTAIN VIEW, Calif. — Cyber Monday had gone swimmingly for Tiny Prints.

Despite the economic downturn, customers streamed into the Tiny Prints online store on the Monday after Thanksgiving, called Cyber Monday because it is one of the busiest days of the year for Web retailers. They snapped up the company’s custom holiday cards at roughly twice the rate of a year ago.

But in the following days, Ed Han, the chief executive, and his team made a risky bet in search of higher profits. Hoping that traffic and sales would stay up, they pulled back on the Google search ads that had helped drive visitors to Tiny Prints.

The gamble backfired. Just as Tiny Prints pulled back, competitors appeared to spend more aggressively to display their ads when people typed “holiday cards” or “photo cards” into Google. By the middle of the week, sales growth began to taper off and a bright holiday season suddenly appeared a bit less rosy.

“We knew we had made a bad decision,” Mr. Han said. Tiny Prints reversed course, but it took the company, which is privately held, more than a day to recover — a critical amount of time during the heavy shopping season.

For most people, Google and other search engines are essential tools to navigate the Web. But the workings of the text ads, the blurbs that peddle goods and services on the search results pages, are largely hidden from Web users.

For more than one million businesses, Google’s search advertising system is like a hose inundating Web sites with traffic. Managing it effectively, though, is as much art as it is science. It requires a mix of analytics and gamesmanship, a combination of skills that has become vitally important in the Internet age.

“It is critical,” said Ellen Siminoff, the chairwoman of Efficient Frontier, which helps companies manage their search advertising campaigns. “You have to have data and be able to analyze it. It’s a bit like playing chess, but you are blind to what your competitors will do.”

Many industry insiders say search engine marketing, as the practice is known, is one of the most effective forms of advertising ever devised. In just a decade, it has grown into an $11 billion business in the United States. It accounts for the vast majority of Google’s $22 billion in annual global sales.

Google’s service, called AdWords, dominates so thoroughly that some advertisers have felt at the mercy of the company, and complained that they had little control over the complex advertising system. One company, TradeComet, filed an antitrust lawsuit accusing Google of artificially increasing its advertising rates.

But by and large, businesses find search advertising effective and continue to flock to it, albeit at a slower rate than in previous years. As growth has tapered off over the last year, Google has stepped up its outreach efforts to help midsize companies like Tiny Prints use its tools more effectively, hoping that will encourage those companies to spend more.

“It’s good for our business and it’s good for their business,” said Claire Johnson, vice president for online sales and operations at Google.

Like many other businesses, Tiny Prints also buys search ads on Yahoo and Microsoft’s search engine, Bing. While results are “very attractive,” the traffic coming from those sites is small compared to referrals from Google, Mr. Han said. As a result, Tiny Prints spends nearly 90 percent of its search marketing budget on Google, he said.

Mr. Han said that Tiny Prints, which specializes in high-end custom-designed greeting cards, had been working at perfecting its search advertising for the last two years. Its three-person team, veterans of Walmart.com and eBay, has become expert at poring over spreadsheets and sifting through the data about visitors and shoppers on the company’s Web site. During the holiday season, they monitor ads and traffic patterns hourly, and meet daily with Mr. Han and other executives to adjust budgets and strategies.

During one of the company’s daily budget meetings in mid-November, Anna Fieler, the vice president for marketing, said, “We are on a trajectory to overspend on search.” She then added, “But we are delivering on revenue.”

Search ads are bought from Google through an auction, and businesses pay Google only when someone clicks on their ad. An ad’s position on Google’s search results pages depends on Google’s secret formula derived from bid prices, the rate at which users previously clicked on the ad and a “quality score” determined by Google.

Since not all clicks turn into purchases, the trick for advertisers is to make sure that the amount they bid, multiplied by the average number of clicks needed to make a sale — the cost of acquiring a customer — does not exceed the profit derived from that sale.

But that can be easier said than done.

Early in the holiday season, for example, most people are window-shopping, so few clicks turn into sales. Tiny Prints is forced to pay more than $50 to acquire each customer, leaving little room for profits on an average order. Relying on spreadsheets of buying patterns from previous years, Tiny Prints search marketers make the case to Mr. Han that their cost of acquiring a customer is on track.

“We are seeing day by day that it is starting to dip,” said Isabelle Steiner, the director for search marketing said at the meeting in mid-November. “I’m projecting that by end of month, we’ll be spending $35.”

Based on those assurances, Mr. Han then gave the team the green light to increase spending on search ads. But Mr. Han brought up another point: competitors could disrupt the plans if they suddenly started bidding aggressively on the same keywords as Tiny Prints.

“What if Hallmark comes in on Saturday?” Mr. Han asked, referring to the Thanksgiving weekend. “Do we have a plan to react to what competitors might do?”

The plan, Ms. Steiner said, was to monitor the site around the clock.

A couple of weeks later, the vigilance paid off.

In a spot check squeezed between a birthday party and her own Christmas shopping, Ms. Fieler was welcomed by a screen of red alerts indicating that the Tiny Prints ads had fallen off the first page of Google search results for important keywords.

“We were then forced to make and implement a new plan to react to the competitive environment real-time,” Ms. Fieler said. “It was very tricky trying to balance not overpaying by participating in the frenzy with getting the impressions and clicks we needed to drive the business.”

By mid-December, with the bulk of the holiday shopping season behind them, Mr. Han and his team were looking haggard. In addition to late-night discussions of bidding strategies over instant messaging, they had pitched in to help wrap and ship orders.

Mr. Han would not disclose the company’s sales. But he said that by and large, the ad campaign on Google, which drove more than 20 percent of revenue, had been a success.

“Of the eight most important days of the year, we got seven exactly right,” Mr. Han said. “On one of the days, by our standards, we fell on our face.”

Copyright 2009 The New York Times Company

FT: Lunch with the FT - Michael O'Leary

Lunch with the FT: Michael O’Leary

By Pilita Clark

Published: December 18 2009 23:02 | Last updated: December 18 2009 23:02

“Here,” says Michael O’Leary, shoving something the size of a small grapefruit wrapped in red and white cardboard over the table in his office at Dublin airport. “Lunch.”

There is an awkward silence.

You do not expect a banquet from a budget airline boss who has threatened to make his passengers pay to use the toilet.

And you do not want to upset a man who calls regulators “rapists”, rivals “arseholes”, and advises customers wanting a refund to “f*** off”.

But what exactly has he given me here? Eventually, I make out the words on the wrapper and blurt: “Oh! A bagel!”

“It’s got pesto,” says O’Leary. “It was either that or McDonald’s. I figured you for a bagel girl.”

For himself, he has procured a grim-looking chicken salad, entombed in thick plastic, also from somewhere in the airport down the road. An aide arrives with two takeaway coffees. So begins lunch with one of the world’s best-known, least-loved and more improbable airline chief executives.

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I had tried to persuade O’Leary’s press officer that lunch in the office would be dull. Surely there was a restaurant he liked in Dublin? No. Lunch with the chief executive of Ryanair would be a Ryanair lunch: at the desk, just your basics, all expenses spared.

In the world of aviation, Ryanair is a phenomenon, a no-frills behemoth that has grown from a tiny operation which, in 1985, used to fly 5,000 passengers a year between Ireland and London in a single plane so small that, according to the company, its cabin crew had to be no taller than 5ft 2in. Since he took over in 1994 O’Leary has relentlessly expanded, with 200 aircraft flying more than 60m passengers a year to 150 European destinations, from the Canary Islands to Constanta in eastern Romania.

Recession has sent bigger, older airlines around the world hurtling into the red. Yet Ryanair has fared much better, coupling average fares of just €32 with a ruthless drive to cut costs and push up revenues by charging for everything from checking in online to buying a cup of coffee on board.

In the middle of this year Ryanair had the highest market value of any airline in the world, after Singapore Airlines. On the day we meet, it is getting ready to announce another quarterly profit and expects to make at least €200m this year.

None of this is evident from Ryanair’s Dublin airport headquarters. Plastic sacks of wastepaper are piled at the entrance. Boxes are stacked up in corridors inside. The paintwork is scruffy, the carpet tired.

The open-plan office feels barely as wide as one of Ryanair’s Boeing jets, and nearly as cramped. There is a single aisle dividing tightly packed teams of surprisingly young-looking workers into departments such as marketing, sales and planning.

It looks less like one of the airline industry’s financial success stories and more like a scene from the television comedy The Office. Except the workers in The Office have bigger desks. And down at the end, peering out from behind the glass walls of his own modest office, is O’Leary.

Wearing jeans, open-necked checked shirt and sneakers, he looks a bit tired and pale up close. This could be because he and his wife Anita Farrell, a former banker, have three children under the age of eight. Or because he seems in a permanent state of exasperation with an endless number of irritants, including his own staff.

As I try to prise off the worryingly sturdy wrapper on the bagel, he says there are two “great things” about lunchtime in an out-of-the-way office like Ryanair’s. “One, there’s nowhere to go and eat,” and two, the only time staff are allowed to use the internet for personal reasons is between five past one and five to two. “So they all tend to stay at their desks at lunch hour!”

The staff get another pasting as he moves on to talk about management consultants (“should all be euthanised”) and MBAs (“bullshit”). “MBA students come out with, ‘The customer’s always right,’” he says, adopting a whiny voice. “Horseshit! The customer’s usually wrong! And, ‘My staff is my most important asset.’ Bullshit! Staff is usually your biggest cost!”

It is hard to say how serious he is about this. Ryanair did once say it had issued a memo banning employees from charging their mobile phones at work to save on electricity bills. But this always sounded like another PR prank by O’Leary, whose flair for using the media is boundless.

Airline entrepreneurs have often revealed a talent for doing their own PR. Richard Branson flew in a hot air balloon for Virgin Atlantic. Stelios Haji-Ioannou wore orange jumpsuits for EasyJet. But O’Leary takes the practice to new heights.

It is not just his willingness to dress up as the Pope to publicise a new route to Rome. Or his (so far unrealised) threat to charge passengers to use the lavatory. It is the sheer savagery of his blasts that make him stand out on the featureless plains of modern corporate life.

For 20 bracing minutes, he runs through a list of his more egregious enemies. There are the “cretins” and “twerps” in the Civil Aviation Authority, the British body that regulates the “bloody evil empire” of BAA, the airport operator whose London monopoly was recently broken up, after prodding from O’Leary, who had griped incessantly about its charges.

There is the “big bloody supertanker” of Boeing, the US aircraft maker that O’Leary has been badgering for months to sell him 200 new jets at recessionary prices. And there is, visible right outside his office window, one of his most hated foes: Aer Lingus, the struggling Irish flag carrier for which O’Leary has made two thwarted bids in the past three years. “There it is,” he hoots, jumping up out of his chair to point out a large squat building facing away from his own. “The gulag!”

He would clearly like to make a third offer for Aer Lingus, but knows this would mean trouble with its “bunch of bearded, sandal-wearing union bosses”, not to mention Ireland’s “utterly useless” politicians.

And then there is that other source of endless aggravation, Ryanair’s passengers. Especially the ones wrecking his efforts to shave luggage-handling costs by checking in their cases (for an extra £30) because they are “too mentally bloody lazy to travel with carry-on bags”.

Surely he doesn’t seriously expect anyone to go on a three-week holiday with just a carry-on?

“Oh, for God’s sake, of course you can for three weeks,” he says.

“I can’t.”

“You can.”

“I don’t want to.”

He stares at me, then admits his wife feels the same way.

“My wife goes away on holidays for a couple of weeks, and she wears bikinis and a few flips-flops, but she needs her 40 pairs of shoes,” he says theatrically. “What do you need 40 pairs of shoes for?”

So, who exactly is the ideal Ryanair passenger? “Our ideal passenger is someone with a pulse and a credit card, who will follow the simple instructions to lower our costs to the maximum.”

By this point, hunger is driving me to make a fresh attempt on the bagel wrapper. Off it comes, and there sits a sad-looking bagel containing a pile of pesto, tomato and cucumber. I start picking at it. O’Leary’s salad sits menacingly on his desk, untouched.

This is a typical lunch for him, he says, when he isn’t at the gym.

What does he like to do in the gym?

“Look up and down a slim girl’s rear,” he says. “Sadly there’s not that many of them. They’re a bunch of old sweaty farts.”

Though greying a little, O’Leary is, at 48, not that old. Before he became a loud-mouthed chief executive, he was a tax accountant, before that a businessman’s son, expensively educated at some of Ireland’s best schools. According to one newspaper’s estimate he is worth more than £300m, partly thanks to a 4 per cent stake in Ryanair. But for years now, he has been saying he will retire “in two or three years”. So what is it today?

“Three years,” he says, suddenly trying to look serious. By then it will be time to “Tesco-ise Ryanair”, by which he means time to ditch him for someone more suitable for a larger, more sedate operation.

“In certain respects I am our best salesman,” he says, explaining the “pantomime villain character” he plays for the airline is done purely for the free publicity (the net spend on advertising last year was €5m, he says, not much for an airline Ryanair’s size). “But I’m also negative in that a lot of my antics detract from the fact that Ryanair has the youngest fleet of aircraft, the best punctuality record, delivers a terrific customer service.

“I think you need me for the rapid growth and for the in-cost reduction initiatives, but once they’re all done you then need to hand over to somebody who’s a bit more respectful of politicians and bureaucrats, talks about caring about the environment and old people and f***ing jungles and fish in the sea and all that shite.”

Goodness knows what O’Leary will do if he ever retires. He claims to have no interest in holidays. “I go to the Algarve with the family for two weeks, because I have to. And I can build the sandcastles with the children. You know, the sandcastle’s fine for the first five minutes, and after that it’s, ‘Oh Jesus, will someone come and rescue me!’ I’m praying for a crisis.”

What about close friends? “My wife, occasionally. My children on a good day.”

He hates the theatre. Only sees films when dragged by his wife, “just for marriage maintenance reasons”. His main interests, apart from Ryanair, consist of farming, football and racehorses, of which he has a few including one called War of Attrition, which won the Cheltenham Gold Cup in 2006. I had always assumed this was an O’Leary-esque joke at a rival’s expense – Aer Lingus, perhaps – but he says the animal had the name when he bought it.

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Samuel Goldwyn (1879-1974)
A bullying, vainglorious style, enormous ego and buckets of charm – Goldwyn had what it took to get films made in Hollywood in its golden age. A Polish Jewish émigré, he once said, “I don’t want to be surrounded by ‘yes men.’ I want people who’ll disagree with me, even if it costs them their jobs”.

Robert Maxwell (1923-1991)
The Czech-born newspaper proprietor terrified employees and family with his forceful style. He had courage and nerve but this tipped over, ultimately, into illegal excess. In a letter to his wife, Maxwell described how during the second world war he had dealt with a German mayor whom he felt had betrayed him: “As soon as we marched off a German tank opened fire on us. Luckily, he missed, so I shot the mayor and withdrew.”

Donald Rumsfeld (born 1932)
Rumsfeld, US secretary of defence from 2001-2006, was famously decisive. In the 1990s, while still a corporate executive, he attended a seminar run by James O’Toole, professor of ethics at the University of Denver. In Transparency (2008), O’Toole recalls questioning the factual basis of a Rumsfeld assertion. “He came after me with bone-chilling intensity,” he writes, “‘No one questions me! Do you understand that? I am never wrong.’”

Al Dunlap (born 1937)
At Scott Paper in the early 1990s Dunlap sacked thousands of people and sold the business on for a profit. Dubbed “Chainsaw”, he relished his ruthless image. “If you want a friend, get a dog,” he once said, adding: “I’ve got two.” He was fired from the Sunbeam Corporation and later investigated by the Securities and Exchange Commission and agreed to pay a settlement.

C Montgomery Burns (born c1909)
The fiendish boss of the Springfield nuclear power plant in the cult cartoon series The Simpsons. Burns’ philosophy of management is, “I’ll keep it short and sweet. Family, religion, friendship: these are the three demons you must slay if you wish to succeed in business.” According to The Simpsons website, he is “more misunderstood than evil”.

Stefan Stern is the FT’s management columnist

There is a strange lack of sophistication about O’Leary. His success has made him one of the industry’s most prominent airline chiefs, his name constantly on the lips of his peers, his business model aped around the world. Willie Walsh, a fellow Irishman and the chief executive of British Airways, once told me, only half-joking, that O’Leary’s success had even driven other airline executives to copy his dress sense: “You get these CEOs who, because O’Leary doesn’t wear a tie or a suit, feel that to have any sort of respect, you can’t wear a tie.”

Yet his world view has curious gaps. At one point, I ask him what he thinks of other well-known figures in his industry. Stelios? “A rich kid who got off his arse.” Richard Branson? “A genius in the way he has made a fortune out of the Virgin brand, but he doesn’t add up to much.” But, when asked about Tony Tyler, chief executive at Cathay Pacific, one of Asia’s biggest airlines, he looks blank. “Never heard of him,” he says. “Anyone in the airline industry outside of Europe, I wouldn’t know who the hell they are.”

There is also something rather quaint about him. He doesn’t have a BlackBerry, there is no computer on his desk. He even claims not to have an e-mail address. “E-mail is rubbish. If there’s something important, I’ll send a fax, or we’ll speak.”

Each day a team compiles two reports on paper for him, one for sales, one for punctuality, which give an instant overview of how the business is performing. He gets up and grabs a sheet showing the day’s bookings, the month’s sales, next month’s sales, available seats, how it all compares with the same month last year, and so on. “Business should be simple,” he beams.

Lack of e-mail does not stop him being an enthusiastic correspondent. When UK advertising standards authorities chided him for claiming Ryanair’s flights were faster than the Eurostar train, he sent them a copy of Everyday Maths for Dummies. Journalists who write about him sometimes get an unsolicited, though frequently charming, missive. A colleague on the FT who wrote a column comparing Ryanair to Aeroflot received a two-page letter along with the latest “Girls of Ryanair” calendar, featuring bikini-clad photos of Miss Check-In and Miss Fuel Pump, a regular production that O’Leary insists uses only company cabin crew.

The admiration is reciprocated, at least in the financial media. On a cabinet in a corner of his office is a dusty collection of awards sent by the likes of Barron’s, the financial magazine that has named him one of the “world’s most respected CEOs” ever since it started handing out the award in 2005. “Barf!” says O’Leary, looking embarrassed, when asked about the prizes.

His constant obsession with cost-cutting, however, not to mention his foul mouth, has also spawned less adulatory attention, such as the website www.ihateryanair.co.uk, dedicated to what it calls “the world’s most hated airline”.

Before today, I say, every person I spoke to and said I was having lunch with Michael O’Leary reacted with horror or pity. Doesn’t he find it wearying to be such a hate figure? “It would be wearying if you weren’t growing by 9m passengers a year,” he says. “We know, fundamentally, that we have huge public support.”

Outside, the light is fading. My flight home is getting near. My bagel is still there, still half-eaten. O’Leary’s salad still sits on his desk.

A few days later, I get a letter from O’Leary, thanking me for taking the time to come to Dublin to see him and hoping I enjoyed my “five-star gourmet lunch”. By the way, he adds: “I forgot to charge you for the coffee, so you owe me one.”

Pilita Clark is the FT’s aerospace correspondent

...........................

Ryanair HQ
Dublin airport

Takeaway coffee x 2 €3.60
Chicken salad x 1 €5.50
Pesto, tomato, cucumber bagel x 1 €5.50
Total €14.60

Copyright The Financial Times Limited 2009.

FT: Book extract - Viral Loop

Book extract: Viral Loop

By Adam L Penenberg

Published: November 6 2009 14:24 | Last updated: November 6 2009 14:24

Businesses are keen to harness the digital world to extend their brands and increase sales

It was the autumn of 2005 when Fritz Grobe, a professional juggler, and Stephen Voltz, a trial lawyer, first heard from a friend the amusing revelation that if you dropped Mentos into a bottle of Diet Coke, it would explode. Performers at heart – the two were members of a regional theatre company in Buckfield, Maine – Grobe and Voltz went out to the backyard to try it. After the pyrotechnics, their first thought was: how far could they take it?

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They weren’t the first. For decades, high school students had mixed vinegar and baking soda to make volcanoes erupt at science fairs and, since the early 1990s, the people at Mentos had been aware of the geyser phenomenon, which would come and go in popularity. Then, in September 2005, science educator Steve Spangler demonstrated the Mentos-Diet Coke effect on a news programme in Denver, Colorado, with the anchor Kim Christiansen getting soaked in the process. The online video became a minor hit.

In Buckfield, Grobe and Voltz spent a morning playing around with the idea. After corralling as many bottles of Diet Coke and Mentos as they could, they constructed a 10-bottle fountain with the aid of some cement blocks and put on a show at the nearby Oddfellows Theatre for other members of their troupe. The response urged them to greater heights and they spent about five months experimenting – cutting slits in bottles, drilling holes, adding screens.

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After settling on the idea of recreating the Bellagio Fountain in Las Vegas, the two drafted blueprints and carefully choreographed their effects to match those of their glitzy muse. On April 29 2006, they laid out 200 bottles of Diet Coke in an intricate design and prepped more than 500 Mentos mints (total cost: $300), then spent eight hours doing walk-throughs. “It felt like blowing up a building,” Grobe says. “We had one chance. We had never done more than 20 bottles at a time before that.”

While a friend with a digital video camera recorded the action, the two, dressed in white lab coats, crossed their fingers and let it fly. Amazingly, it all went off without a hitch. It was an unseasonably warm day, so the effects were even more spectacular, especially at the end when the grand crown shot out in different directions and spun. They got soaked, puddles of Diet Coke gathering in their goggles.

On the first Saturday in June they posted the experiment to their website. Voltz told one person about it: his brother. Within hours, thousands of visitors were viewing “Experiment #137”. By the end of the first day, they counted 14,000 downloads. Two days later, The Late Show with David Letterman called. Grobe told producers they had only done the fountain once and would need a chance to rehearse. Over the next few weeks, Grobe and Voltz grew confident they could perform the Mentos geyser live. Meanwhile, the video became a runaway hit. Over nine days, more than 2m people logged on to their site.

The concept of collective curation has been around for thousands of years; it just didn’t have as sophisticated a propulsion system as it does today. At first it was verbal, with gossip and information spreading from person to person. Chain letters mailed through the nation’s postal system urged recipients to make copies and send to 10 other people, or suffer the consequences. Then there was the telephone, the first efficient person-to-person mode of communication, which, before the rise of the internet, offered an unprecedented level of virality.

Once Mosaic and Netscape seeded the viral plain, though, jokes, memes and information that touched someone’s heart or funny bone – or both – could be dispatched to dozens, if not hundreds of people in an instant. It was only a matter of time before businesses began to recognise the benefits of viral campaigns to extend their brands and, in the process, increase sales. They just had to figure out how.

The answer came from Burger King in the form of a guy dressed up as a chicken willing to do whatever you wanted. The brainchild of ad agency Crispin Porter and Bogusky in 2004, the “subservient chicken” was one of the first mega-successful corporate viral campaigns. There were some wacky television spots, but it was the ensuing interactive web campaign that turned it from idle curiosity into a phenomenon.

Crispin launched a website with the chicken in a living room, encouraging visitors to type commands and watch him perform them, as long as they corresponded to one of more than 300 pre-recorded moves – from a cartwheel to a Michael Jackson moonwalk. But the chicken would draw the line at anything obscene (such as a sex act), approaching the camera to wag his finger in disapproval.

Within a week, the chicken hosted more than 20m visits, with the average user spending an astonishing 5 minutes and 44 seconds on the site. More to the point, sales of Burger King chicken sandwiches increased 9 per cent a week in the month following the site’s launch.

. . . .

Pete Healy, vice-president of marketing at Mentos, heard about the geyser phenomenon on radio. He told a reporter that Mentos was “tickled” by the video. He called Grobe and asked if there was anything the company could do to help.

“Send Mentos,” Grobe replied.

Healy did more than that. What followed was a marketing coup that has become a textbook example of how a company can harness the power of viral video, where the 30-second TV ad, which is waning in influence, is replaced by the audience. Because collective curation means the audience alone decides what’s good and what should be watched while the traditional gatekeepers – TV networks, movie studios, news media – are pushed to the sidelines.

Although Healy knew there would be risks to involving Mentos in this type of new-media campaign, in the end Mentos was candy, not a cure for cancer. How much effort would people put into ridiculing it? “As long as we maintained a light touch and were authentic, we figured we would probably be OK,” he says.

When Grobe and Voltz appeared on Letterman’s show, Healy dispatched the Mentos-mobile, a Pontiac Solstice wrapped in Mentos graphics, which was parked outside the theatre, while street marketers toting six-foot rolls of Mentos gave out sweets to passers-by.

Unlike Healy, the people at the Coca-Cola Company didn’t know what to think. A Coke spokeswoman said: “We would hope people want to drink [Diet Coke] more than try experiments with it.” She added that the “craziness with Mentos” didn’t “fit” Diet Coke’s “brand personality”.

Michael Donnelly, the company’s interactive director, admitted that Coke wasn’t prepared for this. But in July 2006 the soft- drink maker relaunched Coke.com with a new focus: consumer-generated media that celebrates creativity and self-expression. Within days of starting his job at Coke, Donnelly contacted Voltz and Grobe. This led to a meeting between Coke, Mentos, Grobe, Voltz and Google, which also wanted in on the action.

Fritz Grobe and Stephen Voltz told one person about ‘Experiment #137’; after nine days, 2m had downloaded it

The companies agreed to work together to support the performers in a second Mentos-Coke sprinkler video, which Grobe and Voltz dubbed “The Domino Effect”. At the end, there was an advertisement that linked to Coke.com or cocacola.com, announcing a contest. For three months, people could submit videos of ordinary objects doing extraordinary things, with Grobe and Voltz judging. Coke supported the campaign by buying up hundreds of search keywords on Google, MSN and Yahoo, anything relating to Coke, Mentos and explosions, and counted 1.5bn ad impressions.

This democratisation of content is made possible by cheap video cameras, camcorders and mobile phones that capture user-generated infotainment, aided by powerful software like Final Cut Pro and iMovie to shape it, and distributed via a massive digital infrastructure with ample bandwidth. The technological zeitgeist is, however, equal parts human, as online communities blog about what interests them or disseminate links to everyone in their e-mail address books. Meanwhile, user communities have sprouted up on people portals such as MySpace, Flickr, YouTube and Digg. There, people share everything from blog posts to news articles, pictures, audio podcasts and videos in a quest for their own 15 megabytes of fame.

“It’s all about the combination of next-generation content creation and distribution coupled to instant access to your social network community,” says Adam Lavelle, vice-president of strategy for iCrossing, a digital marketing agency. “Because distribution is so huge and fluid and easy, your community connects to other communities, which fosters this distribution. If I know you, then I know everyone you know.”

As for companies caught up in a viral loop, they have little choice but to let go of their brand. As AG Lafley, chief executive of Procter & Gamble, once told the US Association of National Advertisers, “The more in control we are, the more out of touch we become. But the more willing we are to let go a little, the more we’re finding we get in touch with consumers.”

A company willing to let go of its brand can find untapped riches, as Mentos did. The Bellagio Fountain video was downloaded 20m times and more than 10,000 copycat videos were posted online, which created a multiplier effect: Mentos tallied a staggering 215m mentions of its product in TV, print or radio stories over nine months, and estimates the free publicity was worth $10m to the company, half its annual marketing budget. Sales climbed 20 per cent during the first viral wave and, even after the commotion died down, they remained 15 per cent higher than they had been. Mentos made a mint.

Before the video, Diet Coke’s sales had been flat, while the company as a whole was losing market share. But Donnelly reports that after it went viral there was a “significant spike” in sales of two-litre bottles of Diet Coke, the ones used on camera. He wouldn’t give exact numbers but confirmed it was between 5 and 10 per cent.

On YouTube some videos have been downloaded tens of millions of times. There is a cat playing the piano , a music video set on treadmills at a gym, a cackling baby. At first there may not seem any rhyme or reason behind their appeal. Yet there are shared characteristics to some viral videos, and companies seeking to advertise their products are keen to decipher these.

A series created for the Sony Bravia HDTV featured explosions of paint covering whole buildings, thousands of bouncing balls and giant clay rabbits, all in vivid colour; a Dove Evolution ad showed a normal-looking woman instantly transformed into a supermodel before our very eyes. The tagline read: “No wonder our image of beauty is distorted.”

These are the antithesis of the hard sell. In exchange for entertaining us, the companies are afforded the privilege of mentioning their product. The narrative of each video is woven tightly into the brand’s message. Sony’s ad played up the Bravia’s colour and image clarity. Dove’s idea expanded the idea of beauty to encompass more than twiggy supermodels. On YouTube alone, several parodies were viewed a total of 5m times. (“Slob Evolution”, in which a male model eats, drinks and smokes himself into someone who resembles Christopher Hitchens, is a personal favourite.)

Plenty of others have played the system, with decidedly mixed results. Samsung released a series of videos on YouTube featuring a Saint Bernard named Sam on an aeroplane. The few who actually watched characterised these ads as “lame”, “a stinker” and “zzzzzz”. And though Dove scored big with Evolution, another promo for Dove Cream Oil Body Wash received more than 10,000 comments on YouTube, almost universally negative.

What’s the secret of a campaign like this? “You have to have a light touch and be careful not to act like a guy in his mid-40s trying to be a hipster,” says Pete Healy, the fifty-something Mentos marketer. “It doesn’t smell right.”

This is an edited extract from ‘Viral Loop’ by Adam L Penenberg, (Hodder & Stoughton, £12.99). © 2009 Adam Penenberg.

.....................................................................................................

Adam L Penenberg on what’s next for the virtual economy

One need not be fluent in the lingua franca of social media to realise that Facebook is viral through and through. From the start it grew because each new user begat others, for what’s the sense of being on Facebook if none of your friends are? Today there are more than 300m Facebookers and it is en route to half a billion.

Facebook not only constantly expands, stacked atop it is a teeming ecosystem of thousands of social networking applications: games, horoscopes and quizzes, apps for business and charity, all of them also viral in nature. With 25m users, one notable Facebook app is the gruesome game Mafia Wars. Users start their own mafia family with their friends, operate crime syndicates and shoot to be the next Godfather.

While the script isn’t all that interesting, the gamemaker Zynga’s revenue scheme is, because it turns bits and bytes into cold hard cash by trading in virtual goods, which yield about half the company’s revenue (advertising is responsible for the other half). Zynga combines free-market capitalism with high-tech killing hardware. Need an assault rifle for your arsenal? Pay Zynga real money and it’s yours. How about a “meat grinder” machine gun, an Easter egg bomb or napalm? Yours, for your next ambush, at a price.

Even more popular is Farmville, enabling its 60m users to buy digital representations of seeds, chickens, eggs, tools and plots of land. (While neither game runs exclusively on Facebook – they are also available on MySpace, Yahoo and over the iPhone – Facebookers form the biggest base of users.)

Don’t laugh. The market for virtual goods is estimated to be about $1bn in the US. It is spawning entire virtual economies, even being funnelled into charitable causes. Zynga released a special “sweet seed” it sold for the equivalent of $5 each, promising to donate half the proceeds to two non-profits in Haiti. Farmville players generated $640,000, with $320,000 going to charity.

These games, like the social networks they sit on, are viral, with each user attracting others to play. They will not only continue to spread, they will become more realistic and it’s not far-fetched to think that one day an alternate economy could arise.

Copyright The Financial Times Limited 2009.

NY Times: Real-Life Lesson in Using Google Adwords

The pressure is on... one week left before taking the Google Advertising Professional (GAP) exam!

===

October 15, 2009

Small-Business Guide

Real-Life Lessons in Using Google AdWords

By DARREN DAHL

Quick Tips:

• Set a budget, a daily or monthly amount you’re willing to spend.

• Begin by casting a narrow net, advertising in your local market and then expanding to additional markets like Google’s AdSense network.

• Try to choose keyword terms that your competition has overlooked to keep per-word costs low.

• Remember that good campaigns require constant adjustment.

Suggested Readings and Resources:

• Google’s step-by-step guide to getting started.

• Google’s blog about AdWords.

• AdWords for Dummies

It used to be that business owners often struggled to afford advertising for their products or services. Google AdWords has changed that by offering an inexpensive way to spread the word. But if you don’t do some careful planning, you can easily find yourself spending thousands of dollars with little to show for it.

Here are the basics: Google AdWords are keyword-driven ads that show up along the right-hand side of a Google search page under the rubric “sponsored links.” People who search for terms related to those you select — say, “widgets for sale” — will see your ad alongside the results of their search. How high up your ad appears on the list of sponsored links will depend on how much you’re willing to spend on your campaign. The more you spend, the higher your ad will rank. Because AdWords is a pay-per-click service, you pay Google only when someone clicks on your ad.

When you begin your campaign, you create a text-only ad that includes a link to your Web site. Then you select the keywords that will determine which searchers see your ad. You can — and should — specify how much you want to spend, what language(s) your ad will appear in and even the geographical reach of your ad. Google also gives you the opportunity to post ads through its content network, AdSense, which will place your ad on Web sites that offer content that relates to your keywords.

Googling the term AdWords will return dozens of pages of links to experts of all kinds promising to help you construct and optimize an AdWords campaign of your own. What follows are lessons learned the hard way by business owners who’ve actually taken the plunge:

Be Sure AdWords Is the Right Choice

Brent Hollowell and Jesse Travis, co-founders of a travel accessory retailer in Baltimore called Zen Class, had high hopes when they began using AdWords to promote their Nirvana Seat Back Organizer, which slips over an airplane’s seatback tray. While they knew they might get clicks if they paid for words like “travel accessories,” they feared the cost of close to $1.50 a click would be prohibitive because not every visitor would be looking for their product. They decided to be more specific and set up an AdWords campaign using the keywords “airline seat back organizer,” which cost about 5 cents a click; anyone who searched on that phrase would see their ad along the right-hand side of their screen. The problem was that the campaign, after running for several weeks, produced very few clicks on their site. They realized that most people were unaware that seatback organizers existed and thus were unlikely to search for one.

“Given the challenge of having a product that hasn’t existed before, AdWords may not be the best tool for generating interest and sales,” Mr. Hollowell said. He and Mr. Travis have found they get better results advertising through more traditional product-placement ads and using search engine optimization (S.E.O.) techniques to improve their site’s performance on organic Google searches.

Set a Budget

About a year ago, Georgette Blau, who runs On Location Tours in New York City, set up an AdWords campaign to promote tours that were timed for the release of the “Sex in the City” movie. In doing so, she says she made a mistake: She ran the ad on the Google AdSense network but failed to set a budget. An ad placed on the Google network can quickly appear on hundreds of Web sites and generate thousands of clicks. While this can be a good thing, it can also run up quite a tab. “Our ads were showing up everywhere, and we spent $600 before I could shut it off,” she said. Ms. Blau now sets monthly or even daily budgets for her campaigns to promote a “Sopranos” or “Gossip Girl” tour.

Focus on Local Markets

When Apple first introduced the iPhone, Matt McCormick, who runs a phone-repair business called Jet City Devices, saw an opportunity. Knowing that the iPhone’s screen was prone to damage, Mr. McCormick began bidding on keywords like “iphone repairs” and waited for business to flood in. A problem soon became apparent: while his site was swamped with traffic, very few people were actually mailing in their phones to get them repaired. But, after changing his campaign to run only on searches initiated within 50 miles of Chicago and Seattle — cities where he had physical shops where customers could drop their phones off in person — Mr. McCormick says his conversion rate jumped to 10 percent: “If you’re in business in only one or two cities, then Google’s localization feature can save you a ton of money, reduce AdWords competition, and bring great traffic.”

Narrow Your Keyword Net

Just as you might use quotation marks to limit the scope of a Google search, you can use brackets and quotes to focus your AdWords campaign. In fact, this is critical. If, for example, you select “widgets for sale” in quotes, your ad will show up anytime people search for those words — even if they search for, say, “blue or red widgets for sale.” If you use brackets to select [widgets for sale], on the other hand, only those people who search on the exact phrase will see the ad.

Catherine Wood, who runs an online designer clothing site called LaGrandeDame.com, suggests being selective about the keywords you place within those brackets or quotes. Ms. Wood said she followed Google’s guidelines when she set up her first campaigns this past April. “They tell you to try to choose the terms that will collect the most clicks,” she said. Ms. Wood began with 20 or so keywords such as “plus sized dresses” and “designer plus sized clothing” — somewhat general terms that she put in quotes. The result was that she received lots of traffic and quite a few customers. But, for the first four months she ran the campaign, she spent more than $5,000 a month, which meant she was spending more than $200 a new customer.

After learning her expensive lesson, Ms. Wood narrowed her keywords and used brackets to focus tightly on product names like [David Meister black dress] and [Anna Scholz Peacock Neru jacket] to drive very specific traffic to her site. She also learned the value of negative keywords — words you can specify (at no cost) so that people who search for them are blocked from seeing your ad. Ms. Wood, for example, stopped paying for clicks for anyone who searched for Halloween costumes.

Create Landing Pages

Ed Scanlan credits AdWords with helping build his company, Total Attorneys, a firm based in Chicago that provides outsource support to small legal practices. He suggests creating specific landing pages tied directly to the ad you’re running to maximize your chances of turning visitors into customers. Sending a visitor to your all-purpose home page can leave them feeling lost or aggravated. By contrast, if Mr. Scanlan runs a campaign based on a term like “legal case support,” people who click on the ad attached to those words land on a specific page designed just for them. These pages should ask users to take an action, like signing up for a mailing list or filling out a survey, to capture the visitor’s contact information.

Stay on Top of Your Campaign ...

David Metcalfe has used AdWords to promote XNet, a data center in Chicago. About a year ago, he noticed something strange was happening — his click-through rates were going through the roof. That sounds promising, but he was getting traffic steered to his site from a Web site in Spain — even though he had set his campaign for the Chicago area only. Mr. Metcalfe eventually got his money back from Google, but it took him six months of daily contact to do so. While this was clearly a fluke — and possibly criminal on the part of the offending site — it demonstrates two things: Pay-per-click campaigns carry risks, and the burden of monitoring them falls upon the owner of the campaign. “When you’re an entrepreneur dealing with a major corporation like Google, it can be hard to get someone to have a conversation with you,” Mr. Metcalfe said. “I was grateful I caught it when I did.”

... or Consider Outsourcing It

Monitoring an AdWords campaign requires a lot of effort. That’s why some entrepreneurs, like Rick Smith, prefer to outsource the management of their campaigns. Mr. Smith, who sells kitchen supplies online at chefsresource.com, says he originally set his AdWords campaign on autopilot. But he realized that while he was spending a good chunk of money each month, he didn’t know what kind of a return on investment he was getting. After attending an S.E.O. trade show near his home in Laguna Hills, Calif., about two years ago, Mr. Smith hired a firm to run his campaigns for him. The firm now tries new keyword combinations or ad text based on Smith’s latest inventory of cookware or knives. They update or change the ads on pretty much a weekly basis, adding in seasonal or holiday hooks when appropriate, and they monitor the results. In return for a percentage of his monthly budget, the firm sends him a weekly spreadsheet showing how much he has spent and how much revenue has been generated. “I’m spending less than I did when I did it myself,” said Mr. Smith, “and I’m getting more sales as a result.”

Copyright 2009 The New York Times Company

WSJ: Web Ads Hidden Under Cloak of Invisibility

ADVERTISING

OCTOBER 12, 2009

Web Ads Hidden Under Cloak of Invisibility

By EMILY STEEL

Kraft Foods, Greyhound Lines and Capital One Financial have bought some strange ads on the Internet lately. What's so strange about them is that they're invisible.

The companies might not have known about their invisible display ads—the kind that are supposed to appear alongside content on Web pages—if not for Ben Edelman, an assistant professor at Harvard Business School who studies Internet advertising.

Mr. Edelman says his research shows that all three marketers, and many others, have fallen victim to Web sites that use such ads as a way to sell more ad space than they have.

The Web sites can get away with it, he says, because online advertisers don't always audit their campaigns for proof their ads are appearing. It isn't clear how common these ads are or how much they cost marketers.

Mr. Edelman and other Internet-security experts say the ads are created with the use of computer code that makes it look to marketers as though their ads are showing up on legitimate Web sites. But consumers who visit those sites can't see the ads because they have been placed on invisible Web pages.

In one example, visitors to a site called MyToursInfo.com saw an ordinary-looking Web page with one ad for Verizon Communications and another for a weight-loss product. But, Mr. Edelman, who studied the site in January, said software code running behind the scenes opened more than 40 Web pages, each including three ads from marketers such as Domino's Pizza and Capital One, which were invisible to visitors.

Digits

• It's 10 P.M.: Do You Know Where Your Online Ads Are?

Mr. Edelman's analysis of the code was confirmed by computer-security experts at Symantec and McAfee as well as online-ad advisory firms DoubleVerify and Anchor Intelligence.

MyToursInfo.com has since shut down, and efforts to identify its operators were unsuccessful.

Domino's Pizza says it is aware of sites like MyToursInfo.com and is taking steps to protect against them by buying display ads it pays for only when a consumer clicks on them. Capital One said it wasn't familiar with the situation but said it keeps "a close eye" on its online ads.

Verifying that ads appear is an issue that has long plagued traditional media, particularly commercials on local TV stations. But a single online ad campaign can appear on thousands of Web sites, making verification even harder.

Advertisers often buy display ads based on the number of times they are loaded onto a page, rather than the number of clicks they get. Over the past, year, an increasing number of scams have sought to take advantage of that pricing system as advertisers have started buying more of their online ads via middlemen called ad networks, instead of directly from the Web sites themselves. These networks sell ad space at cheap rates across thousands of sites, and they don't always weed out illegitimate players.

Several such networks, including Burst Media and Tribal Fusion, sold ads that appeared on the MyToursInfo.com site, Mr. Edelman says, according to his analysis of computer code.

Tribal says MyToursInfo.com isn't included in its network now but can't say whether it was in the past. Burst says MyToursInfo.com was included in its network earlier this year but isn't now part of its network.

The ad networks say they use a combination of high-tech scans and manual processes to ferret out unscrupulous sites.

"Unfortunately, these bad actors are kind of like ants at a picnic. You constantly have to be vigilant," says Chuck Moran, Burst Media's chief marketing officer.

"It is one of the big challenges of running a network," says Toby Gabriner, president of Tribal Fusion. He said his company now is working with Mr. Edelman to help detect possible fraud across its network. Mr. Edelman does similar consulting work for clients including Time Warner's AOL and Microsoft.

Ads are typically rendered invisible by manipulating computer codes called iframes that determine how a Web page appears on a visitor's computer screen. Iframes allow one Web page to be built inside another, the procedure used to make display ads. But, programmers can also make iframes invisible, so that computer users don't see anything contained in them. In the case of the invisible ads, they typically use multiple invisible iframes. In the case of the invisible ads, they typically use multiple invisible iframes.

Mr. Edelman, who trolls the Web for examples of invisible ads, says ads for Kraft Foods and Greyhound Lines recently ended up buried on invisible pages on a site called MyProfilePimp.com, which offers games, photos and other ways for consumers to personalizetheir profile pages on social-networking sites like Facebook. Mr. Edelman says a visit to the site in June opened a series of invisible pages on the visitor's computer with as many as 46 ads. He says none of those ads could be seen.

MyProfilePimp.com declined to comment.

Kraft says it monitors its online ad purchases but wasn't aware of the MyProfilePimp.com ads. "We are looking into it as we would with any other possible violation of our agreements," it said.

Greyhound was similarly unaware of the case and said that the site shouldn't have been included in any of its ad-network buys. A spokeswoman says the bus line is working to "safeguard against fraudulent activity moving forward."

Write to Emily Steel at emily.steel@wsj.com

Copyright 2009 Dow Jones & Company, Inc. All Rights Reserved

Commercial: Carre de chocolat_Non Blink Eye

Heh... I love chocolate! Moink! :)

===

A hilarious TV commercial from Japan. This Japanese lady in the story is challenging the world's record to keep her eye non-blink as long as she can. Bravo to DENTSU, the agency produced this wonderful spot. I just can't stop laughing even after viewing it so many times.

NY Times: Michelin Builds a Campaign Around Its Secret Reviewers

September 17, 2009

Advertising

Michelin Builds a Campaign Around Its Secret Reviewers

By STEPHANIE CLIFFORD

HERE’S a piece of advance information from the Michelin guide for New York City 2010: 18 new stars will be awarded to restaurants. Michelin is rigorously tight-lipped about the information in its guides until they arrive in stores, and requires similar discretion from its reviewers, who are anonymous.

But in this Facebook era, when privacy and anonymity seem like vestiges of a bygone time, Michelin is making itself a bit more accessible as it prepares for the New York guide’s fifth edition, scheduled to be in stores on Oct. 6, and San Francisco’s fourth edition, scheduled for Oct. 20.

It is running an ad campaign for the guides highlighting its “famously anonymous” professional reviewers. Michelin protects the identities of its reviewers to the point that they generally are not allowed to do interviews with the press, and must invent cover stories about their profession so that even friends and family don’t know what they do.

Despite those precautions, with this campaign, Michelin is peeling back the mask of its reviewers. They will post items on Twitter at @MichelinGuideNY and @MichelinGuideSF, including items about places they are dining, advance critiques of chefs and complaints about service.

•

“One of the things we realized when we started to question people in New York, they realized what Michelin was about, but they didn’t realize that this was about a team of professionals,” said Jean-Luc Naret, director of the Michelin guides. “We’re trying, really, to make sure that people understand they are on the road, they are out there and maybe they could spot them.”

The Michelin guide was first published in France in 1900 as a free directory that offered listings of hotels to promote road travel, which would in turn help sales of Michelin brand tires.

It was distributed at garages and tire dealerships until 1920, when, according to company lore, a co-founder of the guide, André Michelin, noticed stacks of the guides piled up under a garage workbench, and decided that people respected only what they paid for. He began charging for the guide and added restaurant coverage around the same time. By 1931, Michelin was using the three-star system for its restaurants that it still uses today.

Michelin entered the United States with the 2006 New York edition. But New York already had its own restaurant guide. The Zagat Survey was founded in New York City 30 years ago, and surveys regular customers to compile its ratings and reviews.

That is one reason Michelin is emphasizing its professional restaurant and hotel inspectors this year, to differentiate itself from Zagat. Ryan Lynch, senior brand strategist at the advertising agency Cliff Freeman & Partners, which worked on the campaign, said he was also fascinated with the secret life of inspectors.

For instance, inspectors book reservations under fake names, Mr. Naret said. They surreptitiously scribble notes while they are in the bathroom or type them on their BlackBerrys. And they take pains to blend in, even recruiting people to pose as paramours when reviewing certain romantic restaurants.

“They are not going to go by themselves to a restaurant where everyone looks like a couple,” Mr. Naret said. “They have to be a chameleon.”

That got Mr. Lynch thinking that Twitter clues about where the reviewers were eating would intrigue food enthusiasts.

“There’s kind of a ‘Da Vinci Code,’ a little James Bond feel, to who they are and how they go about working and your imagination tends to run wild with it,” Mr. Lynch said. Knowing something about inspectors — from what standards Michelin sets for them to more specific details like where they have been eating — could be a nice piece of trivia for diners, he said.

The Twitter posts from the reviewers so far are along the lines of, “Lunch at Jaiya, renovations still under way but lookin’ good. Yummy spring roll.” But Michelin does not want the Twitter element to be too successful. Crowds are notoriously good at solving online puzzles: people who commented at the site Consumerist.com tracked down the makers of a Domino’s Pizza gross-out video earlier this year, and brands like McDonald’s and Wired magazine have set up online mysteries that crowds solve together. If readers figured out who an inspector was, the inspector would be out of a job.

•

Michelin is taking the precaution of having inspectors send Twitter updates to an editor who posts them, but Mr. Lynch said there were still some worries.

“With technology being what it is, and the advancements in being able to locate people, we open ourselves up for a potential chance of that anonymity being broken, and at the end of the day that can’t happen — it’s got to be a very slow and steady process to find how much these people give away,” he said.

The print ads accompanying the Michelin guide are running in the October editions in San Francisco and New York-area issues of magazines like Bon Appétit, Time Out New York and Architectural Digest. The ads show a handful of urbane young people in a restaurant, watching and being watched, and asks, “Who’s the famously anonymous inspector?” Below, smaller print gives the answer: “You’ll never know, because Michelin inspectors visit restaurants without revealing their identity.”

Michelin is also running the Web site FamouslyAnonymous.com, which includes information about the jobs of reviewers.

“This whole idea of anonymity is the end-all, be-all for what this guide is,” Mr. Lynch said. “To finally start to open up these inspectors to the world is going to be a minute-by-minute learning experience.”

Copyright 2009 The New York Times Company

ST: Past in posters

Past in posters

Excerpt: The show, Coping With Vulnerability: The First 50 Years. Posters From Our Past, will be a merry trip down memory lane for many, but in its own graphic way charts five decades of self-governance and the changes in society along the way. COPING WITH VULNERABILITY: THE FIRST 50 YEARS. POSTERS FROM OUR PAST Where: Basement 1, National Library Building, 100 Victoria Street When: Till Oct 15, 10am to 9pm daily (closed on public holidays) Info: www.mysingapore.sg === Sep 12, 2009

The nation's growth through 50 years of public education posters is on show at the National Library

By deepika shetty

Singapore's story has been told in books, films, photographs and maps. Get set for a new way of framing its history: through posters. If you Stopped At Two, or actually did cut your long hair, or still think of a camel when you save water, it is due to the influence of public education posters over the years. Now, these posters with their quaint pictures and earnest messages are, for the first time, the subject of a free exhibition that opened last week at the National Library Building. The show, Coping With Vulnerability: The First 50 Years. Posters From Our Past, will be a merry trip down memory lane for many, but in its own graphic way charts five decades of self-governance and the changes in society along the way. About 300 posters produced by the Government and its agencies make up the show, organised by the National Resilience Division of the Ministry of Information, Communications and the Arts and the National Archives of Singapore. A 'poster boy' for the impact the posters had on society is musician Jatt Ali, 53. The Long Hair poster with the tag line: Males With Long Hair Will Be Attended To Last, has some hair-raising memories for him. The authorities at that time associated people with long hair with hippies and drug addicts. Jatt tells Life!: 'This is from the 1970s. I had long hair and each time I went to the post office, I was served last. People took these posters seriously. 'Once I was even picked up during a police ambush in the Peninsula Plaza area and ended up missing the show I was meant to perform at. Together with 20 other long-haired boys my age, I was locked up for 12 hours. My parents made a lot of noise after that and kept asking me to cut my hair, but I never did it.' Arts impresario Robert Liew, 60, too, recalls the poster. He says: 'We equated long hair with individualism. The Government equated it with undesirable Western influence, primarily drug consumption. 'There was a fair amount of consternation, but before things came to head, no pun intended, it was all over, the drug threat abated and the length of one's hair returned to the domain of fashion.' Sociologist Paulin Tay Straughan, 46, points out that beyond the obvious and in-your-face messages, these posters tell an important story. 'My mother was a nurse in the Family Planning Department and I pretty much grew up with the Stop At Two message. Things were so much simpler then. The fact that we have to use fancy effects, new media and phrase our messages cleverly now shows how far we have advanced as a nation.' History lesson She adds: 'I know some of these posters seem like a real blast from the past and are extremely amusing. But they also show how Singaporeans did not question as much in the early days. Having survived the war, all people wanted was stability. They had full faith in their lawmakers and there was no cynicism.' The trials and tribulations of the early days Dr Straughan refers to is something the exhibition organisers want viewers to reflect on. Supplementing the posters are news clippings, archival photographs and illustrations. The exhibition is divided into four sections with an introduction showcasing how different countries and governments employ posters as a simple and effective means of communication. From there, its three sections touch on issues of Water, Public Health and Internal/ External Threats. Collectively, these posters explore the many challenges Singapore has faced over the years, from communism to communalism, the lack of water resources, exposure to infectious diseases and transnational terrorism post 9/11. Dr K. Unnikrishna Menon, 59, director of the ministry's National Resilience Division, calls the exhibition a 'logical progression'. Two years ago, the ministry organised an exhibition on Infectious Diseases, Past, Present And Future to educate Singaporeans on the threat of pandemics such as Sars and avian flu. Before that was another exhibition, The Changing Faces Of Terrorism. Dr Menon says of the latest show: 'The idea is to get people to pause and reflect and ponder on the eventful journey of 50 years, and the amazing advances we have made. So many Singaporeans take these for granted. 'The posters serve as visual records of our culture and evolution.' Artist and curator Alan Oei, 33, who is working on a project based on posters in the 1970s, says the show reflects a significant part of Singapore's history. He says: 'Sometimes you wonder why Singaporeans expect the Government to do everything for them, and here you have the answer - because we have always been told what to do and what values to aspire to. 'I grew up with lots of posters, which were more campaigns than simple messages. There are still plenty of campaigns, but the messages have become a lot more sophisticated and subtle. The in-your-face kind of approach is gone.' deepikas@sph.com.sg

=== 1970S CONCERNS MALES WITH LONG HAIR WILL BE ATTENDED TO LAST Iconic. It bluntly spells out the official stand on long hair. Men with long hair would be served last. You can laugh about it now, but things were dead serious then. Apart from being served last, male artists with long hair were not allowed to appear on television. TWO IS ENOUGH In 1966, the National Family Planning Campaign was launched and the Government embarked on a Stop-At-Two policy with the slogan: Girl Or Boy - Two Is Enough. The Government feared that unchecked population growth could strain the country's limited resources. At the same time, Singaporeans preferred boys. This Two-Girl poster, as it was called, was meant to highlight that two children, of either sex, were enough. WATER ISSUES SAVE WATER (undated) A camel grins and bears the message of water conservation. It is simple, it is sweet and it drives the point home. CHILD IN A PAIL POSTER (1980s) Things become a little more subtle. A child in a pail raises issues about water conservation. SECURITY ISSUES PROTECTING SINGAPORE DAY AND NIGHT (1983) OUR ARMED FORCES. BECAUSE A GENERATION'S EFFORTS CAN BE WIPED OUT IN DAYS (1983) Eternal vigilance is the price of liberty. These posters produced by the Singapore Armed Forces and the Ministry of Home Affairs drive home the point. WHAT WILL YOU DEFEND? (2009) Slick look and a clever question. Produced by NEXUS (Mindef) as part of the Total Defence Campaign, this latest in the line shows how posters and their underlying messages have evolved over the last 50 years. PUBLIC HEALTH STOP THE HORROR WITH SOAP AND WATER (2009) Produced by the Health Promotion Board, there were complaints when these hard-hitting posters were put up at some bus shelters near primary schools. The board removed the posters and explained that its research had shown that people did not cite handwashing as a way to protect themselves from flu. This poster aimed to show how germs can be present on hands and that handwashing with soap and water would reduce their number - and the likelihood of serious infections.

Copyright © 2007 Singapore Press Holdings. All rights reserved. Privacy Statement & Condition of Access

WSJ: Coconut Water Bubbles

ADVERTISING
AUGUST 27, 2009

Coconut Water Bubbles

Drink Makers Ramp Up Ad Campaigns for Niche Market

By SUZANNE VRANICA

As the once-hot bottled water business loses steam, drink makers are starting to pour money into marketing campaigns for what they hope will be the next sector to come to a boil: coconut water.

Beginning this week the Zico coconut water's name and logo will be pasted onto pedicabs in New York City while O.N.E. coconut water will make an appearance on the new season of ABC's "Extreme Home Makeover."

Zico in Hermosa Beach., Calif., and Los-Angeles-based O.N.E. World Enterprises are the early stage of what marketers say will be a major marketing push over the next year behind coconut water. Coconut water is the clear liquid inside young, green coconuts and is different from coconut milk, which is pressed from the coconut meat.

Zico is starting to market its coconut water on pedicabs in New York.

A popular drink in Brazil, the water is now catching on in the U.S., thanks to its healthy image and athletes and celebrities such as Madonna who drink the product.

The goal now is to broaden the reach of coconut water drinkers beyond the athletically inclined.

That is becoming increasingly important for beverage makers of all sizes that have watched sales of bottled water -- their cash-cow in recent years -- get hurt by budget-conscious consumers and environmentalists who oppose the use of plastic bottles. For the past 52-weeks ended July 12, sales of bottled water dropped 6% to $7.6 billion, according to Chicago-based market-research Information Resources Inc., whose figures don't include sales from Wal-Mart Stores.

Meanwhile, sales of coconut water doubled this year to roughly $20 million, estimates Beverage Marketing Corp, a New York-based research and consulting firm.

"Although it's a very tiny part of the beverage business, it's growing fast because it's seen as a natural product, it's relatively low in calories and it has a lot of potassium," says John Sicher, editor and publisher of Beverage Digest. "Coconut water is on the brink of becoming significant."

The category's potential is now attracting the biggest players in the beverage business. Earlier this month, PepsiCo agreed to buy Brazil's largest coconut water company, which makes coconut water brands Kero Coco and Trop Coco. Terms of the deal weren't disclosed.

A spokesman for PepsiCo says the company has "no immediate plans" to sell its coconut water brands in the U.S. "Our primary focus is the significant opportunity we see to grow this business in Brazil," he added.

Even so, it's just a matter of time before coconut water brands from giants like Pepsi and Coca-Cola -- and attendant ad campaigns -- are headed to the U.S., say beverage industry experts. Coke and Pepsi have in the past used their marketing weight to muscle into niche markets.

For example, Energy Brands in 2005 spent $3.3 million on U.S. ads for its Glacéau Vitaminwater, according to TNS Media Intelligence, an ad-tracking unit of WPP. Then Coca-Cola bought the brand in 2007 and pumped in marketing money, shelling out $68.4 million last year and enlisted expensive pitchmen such as Shaquille O'Neal to promote the product.

O.N.E. plans to spend $1.6 million on marketing this year and says it will double its marketing budget next year while Zico, which spends about $1 million annually on marketing, says it will increase marketing outlays by 50% next year. Until now both companies have relied largely on sponsorships of niche sports and public sampling events.

Rodrigo Veloso, , O.N.E.'s chief executive officer, says the company is "ramping up its marketing" and intends to use product placement in movies and popular TV programs such as TNT's "The Closer" to promote its brand. It is also dipping its toe into traditional advertising and is planning to launch a billboard campaign within six to eight months.

For the past few years, Zico has relied largely on striking marketing alliances with Bikram Yoga studios around the country. Developed by yoga guru Bikram Choudhury, exercises in Bikram Yoga are conducted in rooms heated to 100 to 110 degrees. Zico gives out free samples, hung signage and sponsored events at many of the Bikram studios.

"Zico sponsors everything, our shows, parties and competitions," says Jennifer Lobo, co-owner of Bikram NYC, which owns several studios in New York.

It still sponsors yoga, but recently Zico has started moving into endurance sports such as triathlons. In June it signed on to sponsor marathon runner Pam Reed, who recently ran in Badwater Ultramarathon, a 135-mile race from between Death Valley to and Mt. Mount Whitney, Calif.

Zico says it won't do traditional advertising such as TV commercials. "The best way to build a brand, particularly a beverage, is to build an intimate relationship with consumers using one-to-one marketing," says Mark Rampolla, Zico's founder and chief executive.

The two companies are likely to face major competition from the beverage titans. The smaller brands have two choices: "get acquired or face increased competition," says Mr. Sicher from Beverage Digest.

But Maile Buker, vice president of marketing at Zico, say Pepsi's entering the field brings "legitimacy to the category," and adds that "the rising tide will lift all boats."

Write to Suzanne Vranica at suzanne.vranica@wsj.com

Printed in The Wall Street Journal, page B10

Copyright 2009 Dow Jones & Company, Inc. All Rights Reserved

NY Times: Ads Follow Web Users, and Get More Personal

July 31, 2009

Ads Follow Web Users, and Get More Personal

By STEPHANIE CLIFFORD

For all the concern and uproar over online privacy, marketers and data companies have always known much more about consumers’ offline lives, like income, credit score, home ownership, even what car they drive and whether they have a hunting license. Recently, some of these companies have started connecting this mountain of information to consumers’ browsers.

The result is a sea change in the way consumers encounter the Web. Not only will people see customized advertising, they will see different versions of Web sites from other consumers and even receive different discount offers while shopping — all based on information from their offline history. Two women in adjoining offices could go to the same cosmetic site, but one might see a $300 Missoni perfume, the other the house-brand lipstick on sale for $2.

The technology that makes the connection is nothing new — it is a tiny piece of code called a cookie that is placed on a hard drive. But the information it holds is. And it is all done invisibly.

“Now, you’re traveling the Internet with a cookie that indicates you’re this type of consumer: age group X, income level, urban versus rural, presence of children in the household,” said Trey Barrett, a product leader at Acxiom, one of the companies offering this linking to marketers.

Advertisers and marketers say this specificity is useful, taking out the guesswork involved in online-only profiling, and showing products to the people most likely to be interested. Retailers including Gap and Victoria’s Secret are using this tactic.

But consumer advocates say such unseen tracking is troubling. On the old Internet, nobody knew you were a dog. On the new targeted Internet, they now know what kind of dog you are, your favorite leash color, the last time you had fleas and the date you were neutered.

“The industry’s love affair with persistent cookies has made it virtually impossible for users to go online without being tracked and profiled,” said Marc Rotenberg, executive director of the Electronic Privacy Information Center, in an e-mail message.

While Congress has been holding hearings on online privacy lately, the sessions have focused on online behavioral targeting. The industry has argued that no government intervention is needed, an argument that the Federal Trade Commission has so far accepted.

Consumers can avoid cookie-based tracking by deleting cookies from their computers or setting their browsers not to accept cookies. But few do, and privacy advocates say it is easy for companies to add cookies without users noticing.

For decades, data companies like Experian and Acxiom have compiled reams of information on every American: Acxiom estimates it has 1,500 pieces of data on every American, based on information from warranty cards, bridal and birth registries, magazine subscriptions, public records and even dog registrations with the American Kennel Club.

Patrick Williams, the publisher of the personal finance magazine Worth, recently asked Acxiom to find the names and addresses of 10,000 Americans from each of 11 cities who had houses worth more than $1 million, net worth of over $2 million, lived within a few miles of other rich people and subscribed to business publications.

“They are the scariest data research company around — they know far too much,” said Mr. Williams, who said he was very happy with the amount of information it gave him.

Companies like Acxiom and a competitor, Datran Media, make the connection between online and offline data when a person registers on a Web site or clicks through on an e-mail message from a marketer.

Datran’s cookies include 50 to 100 pieces of information. Both companies say cookie data is anonymous and generalized. Datran and Acxiom then sell advertising on Web sites like NBC.com, Facebook and Yahoo to companies that use their data.

For marketers, all this data is a boon. Beltone New England, a hearing-aid company, asked Datran to find people online who were 65 and over, owned a house, were head of a household, made more than $35,000 a year and lived in New England so it could show them ads. Datran also tested the same ads with a wider group of people.

“What was surprising was we found the majority of responders turned out to be women 35 to 40 who had elderly parents at home,” said Perry Ebel, Beltone’s director of marketing and business development. He said he was changing his offline marketing to include that group.

By using real-world data online, marketers can customize messages even further — showing different products to people with different shopping habits, whether it is in ads, an e-mail message or in semipersonalized Web pages.

Rodale, which publishes books along with magazines like Men’s Health and Prevention, uses Acxiom data to help determine which promotional e-mails to send to which customers. Offers aimed at women might be accompanied by an e-mail message offering a Father’s Day subscription to Men’s Health for him and a free book on losing belly fat for her. Young men might get another offer — a book on sex positions. Some marketers are using offline data more subtly — for example, showing a budget shopper a discount offer and a regular shopper a full-price section.

“The people who buy less frequently and are most price-conscious may get a better deal than someone who buys more frequently, who would buy anyway,” said Christopher S. Marriott, global managing director of Acxiom Digital, a division of Acxiom.

Of course, shoppers would have little reason to think their experience or their ads are being personalized based on their home value or Volvo ownership.

“It is a little Big Brother-ish,” said Betsy Coggswell, 49, a social worker in Fullerton, Calif., who shops online regularly. Still, she said, she wasn’t shocked. “Every time you put out information about yourself — people have got to understand — it’s going to be collected by somebody.”

Some online companies avoid matching online and offline profiles. In 2000, DoubleClick abandoned plans to connect online and offline data after a huge outcry. Google, which later acquired DoubleClick, has been conducting studies that connect the two areas, but it does not currently collect or serve ads based on such personal information without user permission, Sandra Heikkinen, a Google spokeswoman, said.

While Acxiom, Datran and some of their partners address their use of tracking in their privacy policies, such policies have become worthless, Mr. Rotenberg said. “Real transparency means that the user gets access to the information, not to a policy about the information,” he said.

Paul M. Schwartz, a law professor and privacy expert at the law school of the University of California, Berkeley, said the unwitting participation by consumers makes online marketing different from offline.

“Interactive media really gets into this creepy Orwellian thing, where it’s a record of our thoughts on the way to decision-making,” he said. “We’re like the data-input clerks now for the industry.”

Copyright 2009 The New York Times Company

Fast Company: 6 Lessons From the Best Marketing Campaign Ever

July 12, 2009

6 Lessons From the Best Marketing Campaign Ever

By Rohit Bhargava

Last month an unlikely underdog stunned the marketing world at the International Cannes Advertising Festival [1]. At the show, a single marketing campaign took home a Grand Prix award in three categories simultaneously--direct, cyber and PR-- something that had never happened before in the 50+ year history of the show. Contrary to what you might expect, the unanimous winner of this unprecedented victory was not a Fortune50 brand with an advertising budget of millions, but a small Tourism board promoting a little known island off the Great Barrier Reef.

The winning campaign was called the "Best Job in the World [2]" and was essentially a big online job search conducted through social media for a new "caretaker" for Hamilton Island in Queensland, Australia. Done on a comparatively paltry marketing budget of just $1.7 million dollars and reliant on fortuitous PR and word of mouth, the campaign achieved stunning results, including over 34,000 video entries from applicants in 200 countries, and more than 7 million visitors to the site who generated nearly 500,000 votes.

Just two weeks ago on July 1, the winner of the competition [3]--a 34-year-old British man named Ben Southall [4] started blogging and touring around Queensland, finally bringing the competition to a close. For the next six months, he will be touring around Queensland, sharing his adventures through a video blog, writing, Twitter account [5] and Flickr photos [6]-- generating even more interest in Hamilton Island and all of Queensland in the process. The tangible results for the island are rolling in as well: Amway Australia chose it as the site of their upcoming annual conference, and domestic Aussie airline Virgin Blue just started flying a direct flight between Sydney and Hamilton Island [7], due to the rise in demand from travelers wanting to get to the island.

I realize that tourism and the travel industry may seem far removed from your business. Unfortunately, we don't all have the natural beauty of Hamilton Island to fall back on when starting our marketing campaigns. Still, a big part of the reason for the amazing success of this campaign was not what they were marketing, but how they used social media to do it. In that, there are some lessons anyone trying to promote a product or service could use:

1. Make it believable. Many marketing groups would never make a claim if they can't provide substantial evidence. How might Tourism Queensland prove that their job is the best in the world? They can't. But it is believable because it is a beautiful place and fits what many people's definition of a dream job might be.
2. It's not about how much you spend. One of the major benefits of smart public relations and social media is that it scales in a way that advertising typically doesn't. In other words, you don't have to pay more to get more. The real trick is to have something worthwhile to say that people can't help talking about. You need a good story.
3. Focus on content, not traffic. The typical marketing campaign focuses on traffic to some kind of site. For Tourism Queensland, the biggest payoff of this campaign was having over 34,000 videos on YouTube from people around the world talking about how much they love Queensland. Aggregate the views of all those videos, and multiply them over the long term and you'll start to understand the true impact of their campaign.
4. Create an inherent reason for people to share. Another element of this campaign that worked extremely well was the fact that there was voting enabled on the videos. What this meant was that after someone submitted their video, they had an incentive to share it with everyone in their social network online to try and get more votes.
5. Don't underestimate the power of content creators Most recent statistics point to some number between 1% and 10% of the user base of any social network are the active content creators. Though these percentages may seem small, the potential impact of some of these individuals are vast online. It could easily become the secret weapon for your next marketing campaign.
6. Give your promotion a shelf life. The best thing about this campaign may just be the content yet to come. Ben, the winner, just started blogging and sharing videos and photos, but the content is already engaging, high quality and inspires you to dream of making it to Queensland yourself. Over the next six months, his itinerary will take him across the state of Queensland and unlock many other unique opportunities. Best of all, this content will live on far beyond the time span of the campaign.

Read more of Rohit Bhargava's Influential Marketing blog [8] on Fast Company.

Rohit Bhargava [8] is SVP of Digital Strategy at Ogilvy PR [9] and author of the award-winning book Personality Not Included [10], a guide for brands to be more authentic. He writes the popular non-obvious marketing blog Influential Marketing [11] and speaks frequently around the world on social media, marketing and the power of personality. Follow him on Twitter at @rohitbhargava [12] or become a fan on Facebook [13] before July 31 to be among the first to get a free download of his new ebook on August 1.

---

Links:
[1] http://www.canneslions.com/about/
[2] http://www.islandreefjob.com/
[3] http://www.thisislondon.co.uk/standard/article-23714073-details/Briton+begins+%27best+job+in+the+world%27/article.do
[4] http://www.youtube.com/watch?v=jgPXkIDYr7M
[5] http://twitter.com/Bensouthall
[6] http://www.flickr.com/photos/tourismqueensland/
[7] http://www.travelagentcentral.com/air-travel/virgin-blue-offers-new-direct-flights-down-under-16084
[8] http://www.fastcompany.com/tag/influential-marketing
[9] http://blog.ogilvypr.com/
[10] http://www.personalitynotincluded.com/readpni/
[11] http://rohitbhargava.typepad.com/
[12] http://www.twitter.com/rohitbhargava
[13] http://www.facebook.com/rohitmarketingauthor

Article location:http://www.fastcompany.com/blog/rohit-bhargava/influential-marketing/7-lessons-best-marketing-campaign-ever

Attack of the "Fruits": BlackBerry vs Apple

The Attack

 

The Counteract

NY Times: How to Start a Company (and Kiss Like Angelina)

July 12, 2009

How to Start a Company (and Kiss Like Angelina)

By JULIE CRESWELL

IN their star turns in James Bond movies, Ursula Andress and Halle Berry perfected the art of emerging from an ocean swim and walking onto the beach in a dripping-wet bikini.

For everyone else? Not so easy. But there are some tricks for aspiring Bond girls, and they involve, among other things, waterproof mascara, Vaseline and double-sided tape. There are some finer points, too, to pull off such a feat, and words can’t quite convey their subtleties.

Sometimes — and this is a difficult sentence for a newspaper to print — it’s easier to learn from a video.

That notion led a handful of Google and YouTube veterans to start Howcast.com, and jump into the bustling and fast-growing crowd of Web sites offering how-to content.

Given the competition, from sites like Howdini and even YouTube, Howcast Media is betting that its particular blend of information and entertainment, presented in short and snappy video, will draw plenty of traffic and, most important, deliver a profit.

Certainly the demand is there. People like to watch videos, and, in a bad economy, the ranks of do-it-yourselfers and would-be MacGyvers are swelling.

Already, Howcast has 100,000 videos in its library, some that it has produced itself and many more from others like Playboy, Popular Science, Home Depot and the Ford modeling agency that share in the ad revenue.

The site offers instruction on a range of topics, from everyday issues — fixing a leaky faucet, creating a living will — to the more obscure, like how to survive a bear attack or how to have sex in a car. (Nothing on Howcast is particularly graphic. Plenty of other sites, of course, already offer that sort of stuff.)

Given the ease of posting on sites like YouTube, where 20 hours of video are uploaded each minute, it takes more than a bunch of short clips to succeed. Part of the trick to winning on the Web is having a distinct personality.

Some industry executives give Howcast credit for finding a way to stand out.

“They understand that video is an incredible medium to share and instruct,” says David Eun, a Google executive who oversees strategic partnerships. “But they also realize that they can use video to provide instruction in an environment that is entertaining, not dry.”

One of the biggest challenges for a site like Howcast, though, is the same one that has vexed old-school media giants and survivors of the dot-com boom: How can content creators turn a profit on the Web?

Howcast’s solution is to partner with advertisers and create instructional videos for their specific products or services.

Blurring the lines between editorial and advertising is a tricky endeavor, of course. Companies that try to be too stealthy or clever risk seeing their brand roasted on Facebook, Twitter and beyond.

“Users are sensitive to brands trying to muscle into what appears to be an organic social media environment,” says Nick Thomas, an analyst at Forrester Research. “Yes, I want to learn how to cook something, but do I necessarily want to be taught by someone who makes the ingredients?”

Howcast’s team of young executives argue that they can tap-dance along that fine line by making sure that any branding effort is in a supporting role, rather than a starring one, in its instructional videos.

They are even forging relationships with the State Department as it looks for ways to use social networks and other media to communicate directly with people around the world. Among the videos they’ve produced for it are “How to Protest Without Violence” and “How to Launch a Human Rights Blog.”

Howcast executives are also quickly signing deals with the likes of Google, Facebook and Hulu to spread their videos across the Internet.

“Being a media company today means you can’t exist inside a walled garden, just driving traffic to your own site,” says Jason Liebman, 33, Howcast’s chief executive. “You have to produce the content, distribute it all over the Web, develop the technology — all of which is hard to do. But you need to do everything in order to be successful today.”

SITTING in a stifling office loft in the SoHo neighborhood of Manhattan, with a couple of air-conditioners chugging away in vain, Jeffrey Kaufman runs through the topics that are particularly popular on search engines these days. The list includes werewolves. And manboobs.

Mr. Kaufman is the head of programming at Howcast, and is supposed to have his fingertips on the nation’s pulse through proprietary data-mining tools and information gathered from search engines.

Mr. Kaufman chalks up the werewolf craze to the coming movie “New Moon,” the second installment of the popular “Twilight” vampire series, based on the books by Stephenie Meyer.

Why manboobs? Everyone in the small room shrugs.

Then they have to figure out a how-to video spin on the topics (How to make a werewolf costume? How to get rid of manboobs?). The final consideration is whether the subject will attract advertisers or, better yet, a corporation would pay to have its product or service appear in the video.

The how-to category is big and growing, but extremely fragmented. And while Howcast, whose Web site is just 17 months old, is watching its traffic soar, it lags far behind eHow and About.com (owned by The New York Times Company), according to Hitwise, a research firm.

Howcast says its videos were played more than 20 million times last month across all of its distribution network, including YouTube and Apple’s iPhone. What may give Howcast a leg up on its competitors is the fact that the company is creating a library of high-quality content that could command higher ad rates, says Allen Weiner, an analyst at Gartner, the tech research firm.

To help viewers navigate through the 100,000 videos on its site, Howcast divides them into 25 broad categories — such as technology, travel and food and drink — and then slices and dices those into smaller segments.

Viewers can rate the videos (a video teaching how to pick a lock rates disturbingly high). Videos on sex and relationships are among the most watched at the Howcast site. No. 1 is “How to Have Sex in a Car,” followed by “How to Use Twitter” and “How to Kiss Like Angelina Jolie.” (Ms. Jolie is not in the video; it features two women in their underwear kissing on a bed.)

Mr. Liebman, the executive overseeing this start-up, seems somewhat embarrassed about this playlist. He prefers to talk about the Howcast videos that are the most popular across all the sites that distribute the company’s content, including “How to Quit Smoking” and “How to Do the Moonwalk.”

Mr. Liebman was bitten by the start-up bug when he was 16 and started a newspaper — “it was profitable,” he says — for New York prep school students. In a 1992 article in The Daily News, he was described as the “picture-perfect model of the Privileged Prepster.”

After graduating from Duke with a degree in political science, Mr. Liebman migrated to Wall Street, where he spent some time as an investment banker in leveraged finance. Watching the dot-com run-up on the West Coast, however, he wanted to join the party. He packed his bags and took up residence on his twin sister’s couch in Los Angeles.

A couple of months later, he landed at a software start-up called Applied Semantics. There, he worked in sales and capital-raising while also overseeing a team of engineers that developed AdSense, software that matched advertisements to related content or text on a Web page. AdSense had been on the market for only a few months when, in 2003, Google acquired the company in a deal valued at $102.4 million. Mr. Liebman returned to New York to work from Google’s offices there.

Much of his time at Google, particularly after the 2006 acquisition of YouTube, was spent persuading sometimes stubborn media companies to post clips of their shows or movies on its site.

Other members of the Google video team included Daniel Blackman, a sales and business development executive with a broad background in digital media, and Sanjay Raman, an M.I.T. graduate who started his first software company in college and later was an analyst at Morgan Stanley.

Over time, the group noticed a surge in search traffic for instructional videos at Google and YouTube.

“We were seeing user-generated content getting millions and millions of hits,” Mr. Blackman says, “and it would be nothing more than a guy in his dorm room showing you how to tie a tie with a simple Webcam.”

The growing interest in how-to videos parallels what happened in the early days of video, says Mr. Weiner, the Gartner analyst.

“Things like the Jane Fonda video that showed people how to exercise was a big blockbuster,” he notes.

Other sites were building business models around simple instructional homemade videos, but Mr. Blackman and his team saw flaws in their strategy.

The quality of footage and content was uneven. The pedigree of the individual “experts” was unclear. And advertisers sometimes balk at homemade videos, citing concerns about who owns the rights to the content, Mr. Blackman says.

The three friends left the comfortable confines of Google in May 2007 and set off on their own.

Most large venture capital firms are loath to back start-ups without seeing some content or a mockup of the site. So Howcast’s founders bankrolled the company’s first batch of videos, producing them on the cheap.

For that, Mr. Liebman invited his twin sister, Darlene Liebman, to come on board as another co-founder. Ms. Liebman had spent a decade in television and film, working on shows like “Nash Bridges,” “Queer Eye for the Straight Guy” and video clips for Nickelodeon.

Ms. Liebman’s marching orders were to create 400 how-to videos in two months.

“That’s like boiling the ocean; I thought he was absolutely insane,” Ms. Liebman said. They set up a small studio in the back of their office and called on family, friends and even employees to appear in some of the early videos.

Another one of Mr. Liebman’s sisters, a dermatologist, was enlisted for a video on how to spot skin cancer. The company also sought out local experts, bringing in the head chef from the restaurant Sushi Samba for a video on how to make sushi.

To build its library even faster, Howcast started offering aspiring filmmakers $50 to shoot two- to three-minute videos. The practice continues: Besides getting a chance to show off their skills to a large audience, they also get a percentage of the ad revenue if their video is a hit.

The videos produced by Howcast follow a set format, using quirky music, graphics and voiceovers, which make the videos easier to translate into different languages. Howcast even built its own media player with slow-motion and zoom-in features.

With the company’s beta site running, Mr. Liebman started hunting for venture capital last fall. Thanks in part to the résumés of the Howcast founders, they quickly raised $10 million from the Tudor Investment Corporation and tech insiders like Tim Armstrong, who was recently named chief executive of AOL, and Jason Hirschhorn, recently named chief product officer at MySpace.

“What we liked was the fact that there’s endless content,” notes Kevin Law, a former music executive who is now an investment consultant to Tudor and serves on Howcast’s board. “There’s a how-to that can go along with any service, any product.”

Building up a library of content is relatively easy, says Rupert Ashe, the chief financial officer of Videojug in Britain, which went live in 2006 and now has 100,000 how-to videos.

“The thing that is difficult to get and takes many, many years to build up is a following and traffic to the site and a place in the search-engine constellation,” Mr. Ashe says.

The space hasn’t yet seen a “mega-breakout site,” says Mr. Thomas of Forrester Research. But over time, he says, one or two sites will inevitably emerge as dominant players, and many others will fade away.

IN the middle of last year, the food company Nestlé noticed a peculiar spike in complaints from consumers in a Middle Eastern country about the taste of one of its products, the instant coffee Nescafé Gold.

After some sleuthing, the company discovered that people in that country — Nescafé wouldn’t say which one — didn’t understand how to make its instant coffee. They were making it like traditional ground coffee, said Rakan Brahedni, a new-media relationship specialist for Nestlé in Dubai.

Mr. Brahedni, who says he had “fallen in love” with Howcast’s site, particularly its cooking videos, was already in discussions with the start-up to add videos to Nestlé’s Web site.

So Howcast quickly produced a video showing how to make Nescafé Gold. The graphics, subtitles and voiceover were done in both English and Arabic.

“This was very much out-of-the-box for us, and now we’re seeing a lot of excitement from other brands” inside the company, Mr. Brahedni says. The video will soon appear on a Nescafé Web site, and Howcast will distribute it to some of its partners.

In this light, Howcast may look like more of an advertising agency than a media company. Unlike pricey ad agencies, however, that can charge hundreds of thousands of dollars for a 30-second advertising spot, Howcast produces videos for corporate customers at a fraction of that cost. Its executives say this is its entree into big corporate ad budgets.

And they argue that they are still sticking with their primary focus: to create instructional content.

When JetBlue Airways planned its inaugural flight from Kennedy Airport in New York to Los Angeles International earlier this year, it turned to Howcast to create videos for the occasion.

The result was a series of clips, including “How to Stay Fabulous When You Fly Coast to Coast,” featuring Delphine, a leggy Ford model with her own YouTube following. The video can be found on numerous sites, including Yahoo, AOL, MySpace and Metacafe.

JetBlue executives say they are thrilled with the response from the spots and plan to work with Howcast again. “What Howcast offers is something that is very cost-effective and very targeted,” said Morgan Johnston, a JetBlue spokesman.

Howcast executives see opportunities beyond corporate America. They’re hoping to get more work from the federal government.

So far, they’ve worked mostly with the State Department in its “Public Diplomacy 2.0” initiative to use new media to communicate, says James K. Glassman, a former under secretary of state for public diplomacy.

“What we saw in Iran is that the private sector played a very important role in disseminating information there,” Mr. Glassman says. “Companies like Twitter and Facebook facilitated a lot of the activity in Iran.”

In April, Mr. Liebman traveled to Iraq with a delegation from several tech companies on a trip arranged by the State Department to offer guidance on how new technologies could be used in the country. Howcast is also working on a project for the Defense Department.

Mr. Liebman says the company is willing to “turn over lots of different stones” in its search for profits.

HOWCAST enjoyed a break-out moment earlier this year, thanks to a five-second cameo appearance as one of the featured applications in a television ad for the iPhone. Downloads for Howcast’s iPhone application jumped from around 1,000 a day to 24,000 at its peak.

People who download Howcast.com onto their iPhone spend an average of 12 minutes on the site each time they visit, twice the amount of time spent watching from their computers, says Mr. Raman, Howcast’s head of product development. “That tells me that this is going to be a huge platform for us,” he says.

In the meantime, Howcast is exploring ways to distribute its content on other mobile devices and developing features so customers can buy items they see in the clips.

The company will probably need to do another round of financing in coming months. But Mr. Liebman is projecting that Howcast could be profitable by late next year.

If he’s right, the company could become the star of a new instructional video: “How to Create a Profitable Start-Up.”

Copyright 2009 The New York Times Company

FT: Marketing's new vein

Marketing’s new vein

By Andrew Edgecliffe-Johnson

Published: June 10 2009 23:01 | Last updated: June 10 2009 23:01

An e-mailed invitation dropped into journalists’ inboxes last month, announcing a party on the rooftop of Gawker’s Manhattan office. The event was to celebrate the addition of Bloodcopy, a new blog, to its network that already includes technology, lifestyle and gossip sites such as Gizmodo, Lifehacker and Jezebel.

Bloodcopy offers a familiar mix of viral videos, online discoveries, celebrity sightings and opinionated riffs on stories in the news, all in the irreverent tone for which Gawker’s blogs are known. The only difference, as explained by “Andrew”, Bloodcopy’s “editor-in-chief”, is that the site is “a blog about vampires, by a vampire”.

Visitors might also have noticed unusual advertising from some familiar brands: a Gillette promotion of a “True Blood special edition” of its Fusion Power razor under the slogan “Dead Sexy”; a Geico ad asking how much you could save on insurance if you were immortal; or a picture of a convertible Mini Cooper inviting readers to “Feel the wind in your fangs”.

Clicking on the marketers’ messages would take you to a site for HBO, the Time Warner-owned subscription television channel, promoting the second season of True Blood, its series about vampires, starting on Sunday.

As consumers increasingly fast-forward through conventional 30-second spots and flick past advertisements in newspapers and magazines, marketers are becoming seduced by the promise of viral marketing.

The search for ideas that inspire potential customers to discuss them and pass them round their online networks of friends is turning advertisers into content creators, generating campaigns around campaigns, fictional online worlds and back stories to the narrative of their core marketing message.

The campaign for True Blood is a rare example of the elaborate lengths to which such thinking can be taken.

In its effort to develop the show’s conceit that vampires are now able to live among humans, HBO has gone far beyond traditional teasers that typically accompany a new season.

The Bloodcopy blog has attracted more than 11m page views – remarkable for a piece of advertising content – but behind it lie dozens of other online initiatives. They include websites such as AmericanVampireLeague.com and FellowshipoftheSun.org that purport to be for pro- and anti-vampire groups, a vampire soap opera, a fake weekly news show and viral videos peppered around YouTube.

The co-branded ads are appearing in newspapers and magazines and on billboards, which have also carried more traditional posters with details of the show’s launch date.

HBO’s offline promotional efforts extend to an “advertorial” created with Vanity Fair, mimicking the magazine’s celebrity party coverage in a photo shoot of “celebrity vampires” and their human friends.

The ‘blogvertorial’ that divided a company but pleased its client

“Vampires are not real,” began a post on Gawker’s io9 science-fiction blog last month. It wearily explained that items on the site appearing to be from a sister company called Bloodcopy were, in fact, promotions for HBO’s True Blood series and not an editorially driven Gawker blog.

In a split with his commercial colleagues, Gabriel Snyder, Gawker’s managing editor, was denouncing the campaign they had agreed.

Such tensions occasionally flare up over newspapers’ “advertorial” deals. Online, however, sensitivities are particularly high.

What Forrester Research calls “sponsored conversation”, or paying bloggers to write about a brand, has had a chequered past. The soft drinks group Dr Pepper/7Up ran into a boycott six years ago after using bloggers to promote its Raging Cow drink.

But the desire of advertisers to reach influential audiences means that “blogvertorials” are likely to become more common. Chris Batty, a Gawker marketing executive, told Harvard’s Nieman Journalism Lab that most of its advertising revenue could come from sponsored posts within four years.

Ironically, Gawker’s client appears delighted with all the fuss. For HBO, it all adds to the viral buzz, says Jeremiah Rosen of Campfire, which devised the Bloodcopy strategy.

AM New York, the commuter freesheet, will also feature an eight-page evening edition tomorrow, targeted at the undead reader, while evening wake-up calls will be aired for the nocturnal vampire audience on local radio stations across the US. 

“We started out conceptually trying to figure out ways to hack reality,” says Jeremiah Rosen, director of accounts at Campfire, the New York agency that created Bloodcopy for HBO. “In a world where vampires exist, they would act stupid as well. There would be celebrity sightings and launch parties.”

Campfire was founded by the team that teased cinema audiences with The Blair Witch Project, a fictional horror film presented as an amateur documentary, more than a decade ago, and has won plaudits for past campaigns such as The Art of the Heist for Audi, which staged the theft of a vehicle and involved consumers in trying to find it.

Its pitch is that audiences are no longer satisfied with old-style marketing messages. “They want experiences that will make them think and make them realise they’re part of a community,” Mr Rosen says.

The message resonated with Zach Enterlin, vice-president of advertising and promotions at HBO. “The days of a traditional print ad or 30-second spot really cutting it with the consumer, I think, are gone,” he says.

If so, what may replace them is a complex web of small initiatives requiring tight co-ordination, if HBO’s experience is any guide. The True Blood campaign involved no fewer than 12 different agencies, media buyers and in-house creative teams.

For Don McNeill, president of Digital Kitchen, which worked on the co-branded campaigns, viral videos and a fake cinema ad for vampire dental care, the biggest leap was the decision to mingle True Blood’s message with that of other brands.

“My pitch was ... let’s do something that would scare the hell out of NBC or CBS,” he says, “but even for HBO, this was pretty exotic, so I’m quite surprised they went for it.”

Mr McNeill was equally surprised to secure six willing brand partners, including Harley-Davidson motorcycles (“Outrun the Sun”), Ecko Unltd perfume (“Attract a Human”) and Monster, the jobs website (“When you sleep inside a coffin, it’s easy to think outside the box”).

“I think it’s pretty amazing these top-tier household brands would allow us to blur the line between fact and fiction,” he says.

Some partners had concerns about whether it might interfere with their core campaigns or confuse customers who might want vampire-targeted motorcycles that did not exist. What won them over, says Mr McNeill, is down to the continuing struggle for brands to find original ways of breaking through to consumers in a cluttered advertising market.

Steve Sylven, a Monster spokesman, says that “being singled out by HBO as the de facto brand for employment – even for vampires – solidifies our leadership position”.

According to Michael Norton, communications director for Gillette, a further attraction was the unique chance to be involved in an HBO series because the subscription-only channel does not normally carry advertising.

Mr McNeill predicts that such joint initiatives will become more common, saying: “Brands can piggyback off each other.”

Nobody involved in the True Blood campaign would discuss how the brands shared costs but Mr Sylven says “this is a cost-effective way to get our brand in front of people”.

Campfire’s Mr Rosen argues that the True Blood campaign will also encourage clients who are already asking why they should have to rely on traditional broadcasters to create content alongside which their brands can appear. “Why shouldn’t they have content they create themselves and have control over?” he asks.

It is a labour-intensive process, but according to Mr McNeill it serves three key purposes: generating buzz for HBO; rewarding its most ardent fans; and engaging those who have yet to tune into the show.

As HBO and its disruptive marketing partners plan a television-style “season finale” for Bloodcopy, the True Blood campaign is drawing to a close.

According to Mr McNeill, a campaign about the undead may offer ideas for an advertising revival: “Is advertising broken and do people have to do something different? I think so, absolutely.”

Copyright The Financial Times Limited 2009

FT: Out to launch in a downturn

Out to launch in a downturn

By Jonathan Birchall

Published: June 3 2009 20:42 | Last updated: June 3 2009 20:42

Brad Casper, the head of Henkel’s US consumer products business, says he can get core customers of his Purex detergent brand to spend more on their laundry – even in a deep recession.

The company has an idea it believes could shake up the market: a souped-up version of the anti-static fabric sheets used in American tumble dryers. Henkel’s version is put in at the start of the washing cycle and includes concentrated detergent and fabric softener.

Purex, a low-cost brand, has about 10 per cent of the US market. Its Complete 3-in-1 Laundry Sheets are about 20 per cent more expensive per wash than buying the Purex versions of the three ingredients separately.

Mr Casper says the recession could even help the launch of a product that has taken five years to develop. “It’s absolutely the right time because your share of voice is so much larger,” he says. The launch includes national television advertising and race-car sponsorship. In addition to lower media marketing costs, there are fewer new products to compete against as other companies cut back on spending.

Henkel is not alone: other big brands are bringing out products at an apparently unpromising time. Colgate-Palmolive has launched four-packs of disposable mini-toothbrushes and mouth freshener, called Wisp, which it says address the “currently unmet need of on-the-go tooth cleaning” – but which cost more than breath-freshening strips.

­Kimberly-Clark has launched a premium “pure and natural” version of its Huggies baby products. Procter & Gamble’s recent recession-era innovations include Olay Pro-X, a range of “clinical” anti-ageing products that sell for about twice the price of its regular Olay anti-ageing creams.

Pioneer that served up a treat in recession

Can a new product succeed in a recession? Lynn Dornblaser, who tracks new product trends at Mintel, the consumer market research company, likes to cite the launch by ConAgra foods of its Healthy Choice frozen dinners in 1989 – just as the US was entering a three-year slowdown.

The 14-item line set out to create low-fat, low-salt versions of foods that people habitually eat. It was a wild success, with the brand’s sales hitting $350m and taking 10 per cent of the market in two and a half years. “It is so obvious now that it was such a seminal product, because it changed the frozen-meal market in the US completely,” says Ms Dornblaser.

The Healthy Choice launch, she says, also showed the importance of having a senior executive behind a big innovative step in a tough market.

Charlie Harper, the chief executive who built ConAgra into a multibillion-dollar business, had suffered a heart attack in 1985. When a colleague praised his wife’s tasty chilli stew – made with low-fat turkey rather than beef – he realised there were hundreds of thousands of people in the same position, and championed tasty low-fat “lifestyle” food.

Tony Palmer, chief marketing officer of Kimberly-Clark, argues that economic conditions are less important to a product’s success than whether it is aimed at genuine customer needs. “If you do those things, chances are you’ll be successful whether you are in a recession or not, or whether you have a premium product or not,” he says.

The company’s Scott’s brand launched its first cardboard roll of paper towel in 1930, in the middle of the Great Depression.

But while the central principles of identifying and marketing an attractive innovation remain the same, Mr Palmer says, “the consumer is changing”. As a result, “maybe the decisions we make as a result of the work we are doing are varying” – such as the use of ­coupons and free samples to encourage customers to try new products, and changing the marketing mix.

Purex decided to retest consumer acceptance for the new product in January, after the collapse of the stock markets and the surge in economic anxiety, Mr Casper says. A positive response “led to the conclusion that there was no reason we shouldn’t do the launch”, the largest of its kind undertaken by the brand.

In spite of the consumer mood for saving money, Purex will not use free sam­ples to encourage people to try it. The company believes the product is attractive enough to allow Henkel to direct marketing funds to other advertising efforts to build consumer awareness.

Michael Kuremsky, general manager of the Olay brand at P&G, says the Pro-X product, which costs at least $42, is markedly more expensive than other Olay products. But it is aimed at a more prosperous customer, who would be used to spending $100 or more on similar products in department stores rather than in drug stores.

“The prices are, yes, high and up-price for the mass channel, but actually they are a value for this particular consumer,” he says, describing the product as one of the company’s “big ideas”.

Aware that the economic mood could deter some customers from trying the product, P&G offered a money-back guarantee and high-value rebates to drive sales while trying to maintain the product’s premium status. A customer who spent more than $50, for instance, would qualify for a $25 voucher to spend on future purchases.

“We had a lot of conversation about this ... We knew we had to take the economic crunch seriously,” says Mr Kuremsky. P&G decided it would have to focus on persuading consumers to try the product.

Some product launches, in contrast, have unexpectedly found they are aligned with the current recessionary consumer mood. Purex’s tests of its laundry sheets indicated that consumers, while cutting back in many areas, were receptive to something new that could introduce some excitement into their shopping, as a small domestic luxury.

Overall, however, product launches slow during a recession. In the US food industry, Mintel, the consumer research firm, has data showing that the number of food and drink products introduced in the first three months of 2009 was down 51 per cent on the previous year, and down 32 per cent on the previous month.

As for those that go ahead, Lynn Dornblaser, who tracks new products at Mintel, says for some companies it can be “very hard to turn the ship around” on a planned product launch, even if they want to. Some, she says, try to focus on their biggest ideas, particularly if a product is close to launch. “Instead of having 10 or 12 things going on at once, they focus on one or two really big ones,” she says.

But initial results from some of the larger product launches suggest that if you make the right product, consumers will come, even in a recession.

­Colgate-Palmolive has reported strong initial sales of its Wisp mini-toothbrushes – 7 per cent of the toothbrush market in the first week of April.

Olay’s Pro-X has taken about 5 per cent of the anti-ageing clinical market, says Mr Kuremsky at P&G, which is “right on track for what we were planning”.

As the Purex product hits the store shelves, Mr Casper is optimistic that the laundry sheets have the potential to become a $100m brand in their first year.

Copyright The Financial Times Limited 2009

NY Times: Put Ad on Web. Count Clicks. Revise.

May 31, 2009

Put Ad on Web. Count Clicks. Revise.

By STEPHANIE CLIFFORD

ON a recent Thursday, Darren Herman, the president of Varick Media Management, was sequestered in his SoHo office. He wasn’t scrutinizing a television ad or images from a photo shoot. He was combing through graphs and Excel spreadsheets.

Mr. Herman had run 27 ads on the Web for his client Vespa, the scooter company. Some were rectangular, some square. And the text varied: One tagline said, “Smart looks. Smarter purchase,” and displayed a $0 down, 0 percent interest offer. Another read, “Pure fun. And function,” and promoted a free T-shirt.

Vespa’s goal was to find out whether a financial offer would attract customers, and Mr. Herman’s data concluded that it did. The $0 down offer attracted 71 percent more responses from one group of Web surfers than the average of all the Vespa ads, while the T-shirt offer drew 29 percent fewer. And Mr. Herman didn’t just compare the messages in the ads — he also looked at the sites where they ran, when they ran and what groups of people responded.

From the “Mad Men” era until now, advertising has been about a catchy tagline, an arresting image, the Big Idea. But Mr. Herman and his competitors are bringing some Wall Street-like analysis to Madison Avenue, exploiting the huge amounts of data produced by the Internet to adjust strategy almost instantly.

“It’s putting numbers to an industry that never had numbers before,” says Mr. Herman, 27, who started and sold three media and technology companies before founding Varick last summer. “It’s nice to be able to tell your brand manager or the chief marketing officer which audience is interacting with the unit, what time of day, what day of the week, and what the response is on certain types of offers. Before, nobody could really tell you that.”

This approach turns marketing “upside down,” says Ron Proleika, the vice president of marketing communications at Windstream Communications, an Internet service provider and a client of Mr. Herman’s. “It forces marketers to stay on their toes and think of thousands of small great ideas instead of one great big one."

Major advertising holding companies like WPP, the Publicis Groupe, Havas, MDC Partners and the Interpublic Group are starting data practices, hoping to latch onto what is expected to be the fastest-growing category of online advertising in the next five years.

Where the data guys were once an afterthought in a marketing presentation, now they are at the core of the online strategy. What’s more, they can help advertisers save money in traditional media by testing different phrases or images online to see what works before producing an expensive television commercial or magazine ad. Who attracts more clicks in a grape juice ad, for example — the blond girl or the brown-haired boy?

The shift to data-based campaigns is forcing marketers to learn new skills and drawing a new breed of worker to Madison Avenue. While most data executives now in the field came from media backgrounds, they are recruiting Wall Street math geniuses because the job requires hourly adjustments in strategy based on numbers.

Mr. Herman is trying to hire people from Citigroup and Bank of America, and he hopes that the layoffs in the financial industry will help him do it on the cheap.

“It mirrors the financial markets in many ways,” he says, so “that’s where we go."

Still, getting advertising agency employees to rely on data is difficult, agencies say. And as people trained on Wall Street migrate to Madison Avenue, executives anticipate battles between creative types and wonks.

Traditional ad agencies still don’t have budgets that allow for a lot of digital experimentation, Mr. Herman says. He notes that most traditional agencies “make the bulk of their money in print, radio and television.”

So even as this area becomes increasingly technology-driven, old ways of doing business and clients reluctant to embrace radically new approaches mean that the advertising culture won’t change overnight.

“At the end of the day,” Mr. Herman says, “the entire process isn’t digital because our clients aren’t.”

UNTIL the Internet, advertising required heavy research at the front and back ends. Millions of dollars went into television and print ads, so the advertisers had to get the idea right before they produced one. Determining the effectiveness of those ads was hard. It required follow-up surveys and interviews. And once advertisers began a campaign, they were locked into it — they usually booked TV spots four months before the season began, for instance, and even if a show tanked, they couldn’t always abort their plans.

“In the olden days, the consequences of planning were great, so we’d spend nine months before air date” doing research, says Barry Lowenthal, the president of the Media Kitchen, a media planning and buying company that, like Varick, is a unit of MDC Partners. “Then, nine months after we’d been running the ad, we’d finally figure out whether it was working or not.”

Online, though, advertisers get instant measurements and can make instant changes to a media plan.

Varick and its handful of competitors cement their strategies around a system called exchanges, a mechanism that helps online publishers like NBC.com or Yahoo.com sell ad space. While publishers have some ad space no company would bid on in advance — few advertisers would book a random Yahoo mail page, for instance — publishers still want to show an ad when someone loads that page. So the publishers let an ad exchange like Right Media, from Yahoo, or DoubleClick Advertising Exchange, from Google, sell that space instantly, through an electronic auction, and get a cut of sales.

Such random, seemingly unwanted space could be virtually worthless. But because ad agencies can now use multiple sources to gather very specific demographic data about visitors, such space gains value and can be brokered on an exchange.

Among the sources agencies rely on for data-mining is information gathered from other sites. Imagine that every time someone entered a store while shopping, she received a stamp on her hand. By the time she got to Macy’s, the clerk could see she had visited Williams-Sonoma and Home Depot and could direct her to housewares. A similar principle is followed online.

When someone visits a site like Expedia or Autobytel.com, that site captures valuable information: Someone is a first-class traveler, for instance, or shopping for a hybrid car. Those sites have deals with data companies, like , to place a so-called cookie — a small text file — on that visitor’s hard drive, indicating those preferences. An advertiser like Varick bids on those cookies, instructing an exchange that it will pay a certain amount for an ad when a certain cookie is for sale.

Other companies, like Media6Degrees and 33Across, analyze the world of social media, using cookies and interaction data to find “lookalike” groups among friends on Facebook, Flickr or other social sites. Their theory is that friends share values and are likely to respond to similar marketing messages.

Finally, companies can add cookies for anyone who visits pages on their sites — if someone gets to the checkout page, then abandons his shopping cart, the company will probably pay lots of money to advertise to him again.

This combination — real-time data and ad exchanges — has monetized what was once considered throwaway space online. ThinkEquity, a research firm, estimated that advertising based around Web publishers’ extra space brought in $4.1 billion in 2008, up 32 percent from 2007, and it expects it to be the highest-growth segment of the online advertising market between now and 2013, outpacing even search. (It is still a small part, however, of what ZenithOptimedia, a media agency, estimates to be the overall $487 billion advertising market.)

All this tracking has raised privacy concerns. Some privacy advocates have asked Congress and the Federal Trade Commission to investigate the issue, seeking clear policies about sensitive data, more information on the way companies are tracking consumers and options for consumers to avoid online tracking.

So far, the commission has recommended that the industry police itself. But Jon Leibowitz, one of the commissioners, warned in February that the industry needed to do a better job or face new laws and regulations.

Without much regulation, says Michael Brunick, vice president and media technology director for Cadreon, a competitor of Varick’s, “the data game right now is a little bit of the Wild West.”

WITH so much information to trade on, several advertising firms are creating their own data-based practices.

“We have, over the last year or so, gotten more and more interested in the ways that you can use data to make advertising more effective online,” says Matt Greitzer, the vice president of search marketing and auction-based media at Razorfish, which is building its exchange group.

In addition to what an ad should say, and where and when it should run, advertisers have to figure out how much each ad, or “impression,” is worth. The data helps them do that. “You’re making, in some cases, real-time decisions about how much to pay for a specific impression,” Mr. Greitzer says.

In a simple example, if an advertiser knew that his ads attracted more clicks on profiles.yahoo.com than on movies.yahoo.com, he would pay more when space was auctioned for the first site.

Edward Montes, the managing director for North America at Havas Digital, who oversees its exchange group, says that his data analysts are “basically looking for anything that affects performance — any time they find variance in the matter of how the media performs, that’s what they go in and exploit, and that’s what the exchanges are perfectly set up to do.”

As data executives continue to build on their research, this arena could resemble Wall Street even more: yield managers could hedge their purchases, buy futures to lock in prices and use other trading strategies. And this type of sophisticated testing and trading will require changes in clients’ attitudes.

Mediabrands, a unit of the Interpublic Group, has been quietly running a data practice called Cadreon for nine months that it soon plans to roll out more publicly. In addition to buying standard Web site ad space, Cadreon also buys mobile advertising, online video slots and, soon, spots on digital billboards and other new media.

Traditionally, marketers allocate certain amounts of money for each medium. Quentin George, the interim chief executive of Cadreon and the chief digital officer of Mediabrands, says Cadreon instead would base its strategy on the audience, not the medium.

For a campaign it’s now running for a technology client, Cadreon bought data on visitors to Web sites of the client’s competitors. It divided them into groups that its client already used to segment existing customers offline — like new parents, gamers or designers.

By examining clicks and other data, Cadreon determined the demographic profile of groups that were most interested in the ads. In this particular campaign, new parents responded at high rates so Cadreon emphasized pitching ads online to that group.

As more ads are bought and sold through exchanges, it could transform the ad marketplace. “It is foreseeable that you can go into the system, select an audience and not know whether you are ultimately buying” a cellphone ad or a video ad on a Web site like Hulu, Mr. George says. “That’s a very, very big change.”

Copyright 2009 The New York Times Company

NY Times: Smile and Say 'No Photoshop'

See also: Parody of Dove's 'Campaign for real beauty'

May 28, 2009

Smile and Say ‘No Photoshop’

By ERIC WILSON

MOST readers of fashion magazines are aware that all photographs, at least to some degree, lie.

More often than not, images have been altered — historically with painstaking tricks of lighting and exposure and, more recently, with retouching software that can make celebrities and models look thinner, taller, unblemished, with brighter eyes and whiter teeth. Seemingly perfect. Advances in digital photography have made it so easy to manipulate photographs that cover models often resemble weirdly synthesized creatures or, as the photographer Peter Lindbergh described them this week, “objects from Mars.”

No one could reasonably argue that Gwyneth Paltrow’s skin is indeed made of Silly Putty, as it appeared to be on the May 2008 cover of Vogue, or that Jessica Simpson’s body comes with only one hip, though her left one was suspiciously missing on last September’s cover of Elle, or wonder how the shape of Reese Witherspoon’s chin, dimples and eye color could change so drastically from her angelic Marie Claire appearance in February 2008 to her polished Vogue cover in November to her kittenish Elle pose this April.

Some popular blogs have made a sport of identifying egregious cases of Photoshop abuse, but the degree to which changes are made is rarely disclosed (and usually only when a magazine is caught). But as retouching has become more blatant and bizarre, sometimes resulting in bodies that defy the natural boundaries of human anatomy, a debate over photo manipulation has spilled into public view, with Mr. Lindbergh, one of the world’s most famous image makers, leading the charge against the practice.

“My feeling is that for years now it has taken a much too big part in how women are being visually defined today,” Mr. Lindbergh said in an e-mail exchange. “Heartless retouching,” he wrote, “should not be the chosen tool to represent women in the beginning of this century.”

Last month, Mr. Lindbergh stirred the pot by creating a series of covers for French Elle that showed stars like Monica Bellucci, Eva Herzigova and Sophie Marceau without makeup or retouching. The issue struck a nerve with readers in France, where health officials were already campaigning for a measure to force magazines to note when and how images are altered. But editors of American publications, who last year resisted such a proposal within their trade group, the American Society of Magazine Editors, have also noted a backlash against images that appear manipulated to push an idealized standard of beauty.

It now seems fresh, even exclamation-worthy, when a magazine presents an unvarnished image. Last month, for example, an issue of Life & Style took the unusual step of declaring that a cover photograph of Kim Kardashian was “100 percent unretouched,” as if it had done a great service to the cause of pseudo-celebrity journalism. And People, in its “100 Most Beautiful” issue this month, included images of 11 celebrities “wearing nothing but moisturizer.”

“Fashion magazines are always about some element of fantasy,” said Cindi Leive, the editor of Glamour, “but what I’m hearing from readers lately is that in fashion, as in every other part of our lives right now, there is a hunger for authenticity. Artifice, in general, feels very five years ago.”

Oddly, so does this debate. It was in 2003 that one of the most famous retouching controversies arose when Kate Winslet asserted that the British edition of GQ had excessively altered a photograph of her to make her look thin. That episode was followed by many more: Andy Roddick’s enlarged biceps on the cover of Men’s Fitness, Katie Couric’s streamlined promotional photos and the slimming of Faith Hill in Redbook, the latter exposed in a 2007 competition by the fashion Web site Jezebel to uncover retouching sins. Glamour, too, has faced photo-tampering accusations, including a charge, which the magazine denied, that it digitally shrank the actress America Ferrera on the cover of an issue in 2007 dedicated to techniques for readers to flatter their figures.

And yet a raw-celebrity movement has been slow in coming. That may be because, as several editors said privately, celebrities’ publicists almost always demand retouching of wrinkles and visible cellulite. As a result, a celebrity can look different from one magazine to the next.

“There’s no question that images have been altered so significantly that, at times, it’s so apparent it’s transparent, actually,” said Dennis Freedman, the creative director of W, a magazine that intentionally features photographs of both extremes: Juergen Teller’s patently unretouched portraits on one hand and the digitally stylized work of Mert Alas and Marcus Piggott on the other.

“These are covers that look like Breck ads,” Mr. Freedman said. “But my question is, did they intend for them to look like Breck ads? Is there irony? Is there subversion? Because there is no question they are retouched beyond any possible reflection of what’s actually in front of the camera.”

The ethical issues of retouching have been discussed at least since the 1930s, when George Hurrell manipulated characteristics of Hollywood actresses in photographs to make them into icons of glamour. But technology has changed the scope of the debate, fueling a long-held criticism that magazines are promoting an unattainable standard of beauty.

In the early 1990s, as the first programs for digital manipulation came into use, some art directors began exploring the potential for creating images with a heightened sense of reality, actually as a reaction against the prevailing images of supermodels that looked too perfect. They were interested in creating images like those achieved through special effects in movies. Magazines like The Face championed a style coined by its art director, Lee Swillingham (now the creative director of Love), as “hyper real,” with photographs by Norbert Schoener, Inez van Lamsweerde and Mert and Marcus that seemed to share an affinity with Mannerist paintings. Models were presented as grandes odalisques, with impossibly long necks, or waists reduced to sizes against nature. They were not suggesting that the look should be attainable.

“We were trying to create a future fashion,” Mr. Swillingham said. “You could do something that looked gritty and real or something that looked like plastic.”

No one could have predicted how quickly that future would come. Suddenly, images could be changed even as they were being made, replacing backgrounds and filters with the touch of a button, turning night into day. It follows, then, that the next logical step in fashion would be a reaction against all that. For a coming issue of Love, Mr. Swillingham just commissioned a shoot where the brief to Glen Luchford, the photographer, was to make images that look like his early work in 35-millimeter film, using a digital camera to recreate a pre-digital style of photography. Some cutting-edge photographers now say that they, too, would like to see images that are more real.

“Anybody with a few days’ experience on Photoshop can drop in a new background or remove a pimple off a girl’s nose,” said Phil Poynter, who shoots campaigns for Tommy Hilfiger and editorials for Love and Pop. Still, he noted, “the big discussion in the fashion business has always been about should we retouch girls, should we create a portrait of a girl that is not achievable by a real girl.”

That issue came up in a revealing moment from the recent “60 Minutes” profile of the Vogue editor Anna Wintour — actually from an outtake of Morley Safer’s interview with her that was posted online — when she described an Irving Penn photograph, used to illustrate an article about the dangers of obesity, as one of the most beautiful ever to appear in her magazine. The starkly lighted image shows not a model in haute couture but an obese woman who is naked.

“It’s the kind of picture that really is going to make people stop and pay attention and have them just be provoked, which was really the point,” Ms. Wintour told Mr. Safer.

The implication here is that what can be considered a provocative image in a fashion magazine today is one that shows something real.

Undoubtedly, the most compelling photographs are ones that show real character, said Mr. Freedman of W. Nevertheless, he questions whether there will be a remarkable change as a result of the media attention following Mr. Lindbergh’s French Elle covers. Fashion magazines, to some extent, thrive as an escape from reality, a window to something that exists outside the ravages of time.

“I wonder how long that’s going to last,” he said. “It raises an interesting point, but that in and of itself becomes a kind of gimmick. I would not bet my life savings that it is something they are going to continue.”

Copyright 2009 The New York Times Company
    

WSJ: Look at This Article. It's One of Our Most Popular

Most-popular lists have become standard on Web sites. But following the herd can make you wonder about the wisdom of crowds.

===

THE NUMBERS GUY
MAY 20, 2009

Look at This Article. It's One of Our Most Popular

Top-Ten Lists Abound Online, but Following the Herd Can Make You Wonder About the Wisdom of Crowds

By CARL BIALIK

Popularity is, unfortunately, still all the rage.

The Internet has facilitated an outbreak of popularity contests as online news providers rank the top 10 most-read, -emailed or -commented articles on their home page.

These rankings have become a standard feature on news sites for the last two years, including this newspaper's, and sites continue to expand the features: The New York Times is adding a most-viewed list, Fox News (owned by News Corp., as is the Journal) introduced most-shared this week and a most-commented list is coming to CBSNews.com this month.

These lists are among the byproducts of the Internet's knack for being instantly quantifiable. Purchases on Amazon.com update the online retailer's sales rankings and their people-who-bought-this-also-bought-that recommendations. Yahoo continually updates its top 10 user searches on its home page, and the iTunes Store does the same with its list of top songs.

Using popularity rankings to make decisions, however, has downsides. These online rankings are public, creating a positive-feedback loop. The more popular something becomes, even if just from a random burst of interest, the more likely it is to grow ever more popular. And that has troubling implications about the effects of all sorts of popularity rankings, from bestseller charts to election polls.

Frequently, popularity rankings speak less to the merits of what's being observed and more to the fact that crowds are observing it. In other words, peer pressure. "If you see a crowd around a building, you pop over and see what everyone is looking at," says Jimmy Leach, editorial director for digital at the Independent newspaper in the U.K.

Psychologist Stanley Milgram demonstrated that people pop over even if everyone is looking at nothing, by sending a group of experimenters into the street to stare upwards. With a large enough group of gapers, passersby stopped to stare, too.

A more-recent study demonstrates that popularity in the music world, even unearned, breeds more popularity. Researchers enlisted more than 12,000 volunteers to rate and download songs from among 48 chosen for their relative obscurity. Some of these volunteers were lied to: At a certain stage in the experiment, popularity rankings for this group were reversed, so the least-downloaded songs were made to appear most-downloaded.

Suddenly, everything changed. The prior No. 1 began making a comeback on the new top dog, but the former No. 47 maintained its comfortable lead on the old No. 2, buoyed by its apparent popularity. Overall, the study showed that popularity is both unstable and malleable.

Numbers Guy Blog

• The Growing Popularity of Popularity Lists

Deducing merit from popularity "can lead to self-reinforcing snowballs of popularity, which can become decoupled from the underlying reality," says study co-author Matthew Salganik, a Princeton University sociologist. These snowballs can grow much larger than their competitors, leading to winner-take-all markets.

And maybe it doesn't matter so much if the most-deserving entrant wins, whether it's Britney Spears ruling pop, or a gossip item leading a list of most-read news articles. "If we view the role of cultural products as giving us something to talk about, then the most important thing might be that everyone sees the same thing and not what that thing is," Prof. Salganik says.

Other recent studies have quantified the popularity of popularity in other settings. Signs telling guests at a hotel in the Phoenix area that towel reuse was the No. 1 choice among their peers increased the rate of this practice by 34%, compared with other signs with messages stressing the impact on the environment. Arizona State University psychology Prof. Robert Cialdini and colleagues found that rates went even higher when the signs specified that most prior guests in the same room reused towels.

"To the extent you can convince that, not just a lot of people are doing this, but a lot of people like [them] are doing this," you'll get greater buy-in, Prof. Cialdini says.

Another group of researchers demonstrated this with restaurant diners in Beijing. Table cards at Mei Zhou Dong Po, a Szechuan restaurant chain, touting the five most popular items boosted ordering of these items by 13% to 20%, according to a forthcoming paper by a team from Peking University and Duke University. "Part of it is reassurance that something is good and worth buying," says Bill Paul, a restaurant-menu designer.

Calling these items popular is crucial, the researchers found, because other table cards that highlighted five sample items but made no claim on their popularity had little effect on sales. And the diners liked following the pack: "Diners who were exposed to the popularity information treatment are more satisfied," says co-author Hanming Fang, a Duke economist.

That's been a key finding of news sites that are willing to share some of their results with rankings -- it's not just that these articles are highlighted, but that they're being labeled popular, that makes the lists effective. Restaurants would never publicly shame their least-popular items, and few news sites do, but AOL's Digital City has since its debut last September. While the site's most-popular list "usually becomes self-fulfilling," articles designated as least-popular don't get such a bump, says James Fletcher, editor in chief of the site.

The Denver Post's relatively robust most-popular lists, which include subrankings for Denver suburbs and arrows signifying which stories on the charts are climbing or falling, account for 3% to 5% of clicks on denverpost.com, according to the site's senior developer, Joe Murphy.

At Yahoo News, the various popularity rankings drive 10% of all traffic to articles, according to Mark Walker, region business leader for Yahoo News, which started publishing such rankings in 2000, well before most of its peers. "What began for Yahoo News as one engineer's way of exposing interesting consumer data and insight has now become industry standard for news outlets everywhere," Mr. Walker says. "The lists enable users to shape news in real time and provide a filter for mainstream journalism."

Users are shaping news by voting up popular-culture coverage and gossip on many sites. "Celebrities, sex and anything Jon Stewart-related" rise quickly to the top of the list at the news-aggregator Newser, according to Chief Executive Patrick Spain. "This is at odds with what people tell us about what they want in their news -- serious, important stories," Mr. Spain says.

Perpetuating the popularity of relatively frivolous news -- or of unworthy bands, or Kung Pao chicken -- isn't a grave crime. But these suggest how unearned popularity numbers may be unduly influencing people in weightier choices, such as for presidential candidates. Political scientists have often noted that polling numbers, particularly early in the race, can create a feedback loops as leaders gain press coverage and credibility, which widens the gap in polls.

Popularity should never be confused with importance. "If you've written horrific stories of downtrodden people in Afghanistan, and those get battered by a story about a piece of battery-operated equipment, it can be quite dispiriting," says Mr. Leach of the Independent.

DeLaurentiis Entertainment Group/Everett Collection

King Kong Lives (1986)

Write to Carl Bialik at numbersguy@wsj.com

Printed in The Wall Street Journal, page A13

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FT: A want to break free

A want to break free

By Andrew Edgecliffe-Johnson

Published: May 18 2009 03:00 | Last updated: May 18 2009 03:00

How much would you pay to read this page? At about 2,000 of the roughly 50,000 printed words in a typical copy of the Financial Times, it should in theory be worth about 4 per cent of the newspaper's cover price - 10 US cents, 17½ euro cents or eight pence.

To readers particularly interested in the subject, perhaps, it may be worth more. To others, though no journalist would like to admit as much, it will be worth nothing.

Similar questions are being asked with growing urgency in boardrooms across the news industry and the wider media sector, as stalling economies challenge the foundation on which most content owners' digital strategies have been built.

For well over a decade, the prevailing orthodoxy of the internet has been that information wants to be free. Publishers, broadcasters and games developers alike are beginning to discover, however, that advertising alone is not providing the sustainable digital business model they expected for their expensively produced content.

The result is that consumers, used to having a free ride on the information superhighway, are about to be confronted by many more tollbooths.

Rupert Murdoch, chairman of News Corporation, this month summed up the shift in thinking. "We are in the midst of an epochal debate over the value of content, and it is clear to many newspapers the current model is malfunctioning," he said, announcing plans to start charging for online content from general interest newspapers such as The Times of London.

The Wall Street Journal, the News Corp title that like the Financial Times is among a few business-focused papers already charging for online access, announced soon afterwards that it would introduce additional premium tiers to its subscription model and a micropayments system to bill occasional visitors for individual articles.

Newspaper owners from the UK's Guardian Media Group to the New York Times are also looking at online charges for some specialist content, but the debate is spreading beyond the hard-hit print sector. Jeff Bewkes, Time Warner's chief executive, is trying to rally industry support for a "TV Everywhere" system that would make cable network programming available online for free only to customers who have paid for cable subscriptions. Walt Disney, the first broadcast network owner to make shows available for free online, is also researching subscription-based digital services.

The music industry, having clawed back only a fraction of the money lost to online piracy through legal services such as Apple's iTunes, is trying to develop a premium model for music video. Universal Music has begun work with YouTube on a professional music content site, Vevo . It plans to launch as an advertising-supported service, but Edgar Bronfman, Warner Music chief executive, warned this month that any such site would need "serious monetisation opportunities above and beyond advertising" to be effective.

Digital delivery encouraged the unbundling of the album, allowing consumers to buy only their favourite music tracks. Now other media owners face the threat that customers will want to pay for just the online equivalent of the sports section or their prime-time hits, leaving them struggling to sell less valued parts of the paper or broadcast schedule.

Micropayments will be only a small part of the solution, but the fact that such ideas are being pursued demonstrates the extent to which online advertising, media owners' current dominant business model, is failing to live up to its promise.

Advertisers' reallocation of budgets to an online environment promising better targeting of consumers persuaded media owners to make content available online with no charge, even though they depend on both advertising and fees in their traditional businesses such as newspapers, magazines and cable channels.

Heady growth in online advertising encouraged countless start-ups and traditional media businesses to chase the same business model. But the belief that online advertising would grow fast enough to fulfil all the business plans riding on it was "almost a collective psychosis", says Rob Grimshaw, managing director of FT.com.

Instead, he says, supply now exceeds demand in news, where vast amounts of poorly differentiated inventory is driving down the amounts advertisers will pay. "A large chunk of the publishing community must move away from free," because "the numbers on the advertising side don't stack up", he says. FT.com's hybrid model , allowing a certain number of free visits to the site before requiring registration and then a subscription, is being studied by some other publishers but has not yet been replicated.

Compound annual growth in global online advertising spending averaged 32 per cent between 2003 and 2008, according to Zenith Optimedia, but will slow to 19 per cent between 2008 and 2011. In more mature markets such as the US and UK, growth in online advertising ground to a halt at the end of last year and could decline this year. Even Hulu, the fast-growing online television and film site, has struggled to sell all its advertising space this year.

Advertising remains a cyclical business, and traditional media owners believe further growth is likely online when the economic outlook improves. But they have put more resources than before into experiments with additional digital models. The attempt to diversify is logical, says John Chachas, co-head of the media practice at Lazard. The newspaper industry, he says, "needs to change its revenue model as well as its cost model, and charging for content is one piece of that".

However, sustaining parallel business models will be challenging, warns John Kennedy, chairman and chief executive of the IFPI, the music industry association. Record labels learnt from their battles over illegal file sharing that "you can't sell content at the front door if it's being given away free at the back door", he says. "You need a number of new business models, but at the end of the day you do need to address 'free'."

Lauren Rich Fine, a former Merrill Lynch analyst now at ContentNext Media, says she would like to believe content charges will succeed but doubts they will "because of the perception that there's so much available out there for free".

David Lancefield, author of a recent PwC report on the sector, says media owners' thinking about digital models is changing in part because of the damage being wreaked on their core businesses by the advertising downturn.

Many companies justified their free online strategies with the thinking that the cost would be subsidised by the offline business, or could be written off as a loyalty-building marketing expense, Mr Lancefield says. "It's quite a change in culture to becoming a business in its own right."

T he biggest uncertainty holding back media owners remains the worry that customers have been schooled not to pay for content online.

Such a migration from free to fee has worked before, when cable operators introduced a subscription model to television. But pay-television took off because it offered a dramatic expansion of the content on offer, from Hollywood films to live sports. Consumers are now overwhelmed by choice on multiple media.

The problem is particularly acute for general-interest newspapers. A New Media Age survey found this month that 77 per cent of UK regular online readers were not prepared to pay for access to news websites. A separate PwC report with the World Association of Newspapers found that consumers were more willing to pay for financial or sports coverage, but would choose free content over subscription sites "when the quality was comparable or sufficient for their purpose".

Charging for consumer media content "may work for specific niches of content and consumers", Mr Lancefield argues, "but it can't be just repackaged and repurposed. To tip people into the fee-paying world, it will have to be distinctive and new". Yet making more distinctive content will be hard for companies simultaneously cutting costs in reaction to plunging revenues.

The early success of applications for Apple's iPhone mobile device and readers such as Amazon's Kindle suggest that some consumers see more value in digital content when it is married with appealing technology.

Technological challenges are among the biggest hurdles facing those seeking new paid models online, however, according to Mr Grimshaw. When FT.com introduced subscriptions to what was then a free site in 2002, "it wasn't easy", he recalls, partly because of the technical complexities of paid sites, such as processing payments. Another problem is that subscription content is often excluded from search engines such as Google. Introducing a pay barrier can be akin to taking your newspaper off a newsstand.

Digital newsstands are already under attack from content owners seeking deeper-pocketed revenue sources than their customers. Content creators' intellectual property rights were violated as badly by US internet companies as by Chinese pirates, Mr Murdoch complained this month. The Associated Press consortium has warned it would take "all actions necessary" to pursue sites using member newspapers' content without paying.

"It makes sense for newspapers, which are burdened with fixed cost structures, to get meaningful compensation from the host of people who are grabbing pieces of their stories to drive traffic to their own businesses or websites," Mr Chachas says.

For now, content owners' main leverage over the aggregators is their scale. Moving to a paid model will almost certainly diminish that by cutting traffic to their sites from occasional customers and aggregators alike.

"There is no doubt that we could convert NYTimes.com to a paid content site, and there is likewise no doubt that it would be greatly diminished as an advertising venue," Scott Heekin-Canedy, New York Times general manager, told online readers last month.

Handled clumsily, then, attempts to move from free to pay could backfire by diminishing revenues.

Content owners are battling what Chris Anderson, author of The Long Tail , calls "a revolutionary price" in his next book, Free ; and many things - from search to user-generated content - will remain free online. Professionally produced content, however, is likely to become much scarcer for those unwilling to pay for it.

"Who started this rumour that information had to be free and why didn't we challenge this when it first came out?", Time Inc's Ann Moore asked this year.

According to Mr Grimshaw, the answer is that a "free evangelist movement [convinced] everybody that the internet was somehow different and any attempt to impose a business model was an imposition on people's human rights". Changing that perception will mean nothing less than challenging the culture of the internet as we currently understand it.

File Sharing

A decade on from Napster, the music business fights back

After years of telling the music business it had done everything wrong, video game developers, newspaper owners and broadcasters have begun to turn to the industry for advice on how to defend their intellectual property rights. The situation "has changed so much in the last few months", says John Kennedy, who as chairman of the London-based IFPI has fought many of the record labels' legal battles.

Sooner or later, in conversations with media owners about the problem of competing with free content, the talk will come round to the troubles of the music business. In the decade since the Napster file-sharing site launched, compact disc sales have collapsed, wresting power from labels. Now, growth in legitimate digital revenues is stalling, with Warner Music's last earnings report showing just 5.5 per cent year-on-year growth, and some of the initiatives the industry hoped would transform their digital businesses failing to do so.

Ringtone sales are fading, some advertising-supported music websites are closing and record executives have been disappointed by early sales of Nokia's "Comes With Music" mobile subscription bundles.

Warner Music's Edgar Bronfman complained that MySpace Music "needs to change" and Digital Music News has reported that sales through the iTunes music store have fallen since Apple agreed to labels' demands to allow more flexible pricing.

The story alarms film producers and magazine editors alike - but Mr Kennedy says other media owners should take some comfort from where the music business now finds itself. "We do at least have a $3.8bn (€2.8bn, £2.5bn) legitimate digital business," he says. "Given that has been achieved in the context of 95 per cent piracy, it gives you an idea of the potential."

Record labels still see 20 copies of their product consumed illegally online for every one downloaded legally. However, the percentage of web users who are file sharing has not grown for five years in Europe, according to a new study from Forrester. A separate report by NPD Group found that the number of US internet users downloading music legally surpassed those downloading illegally for the first time last year.

Mr Kennedy says he sees a shift in consumer attitudes, suggesting a mass market is finally being schooled to pay for content: "People realise more and more that this thing is going to come to an end and they ought to start thinking about what their legitimate consumption model is."

Copyright The Financial Times Limited 2009

NY Times: Message in What We Buy, but Nobody's Listening

May 19, 2009

Findings

Message in What We Buy, but Nobody’s Listening

By JOHN TIERNEY

Why does a diploma from Harvard cost $100,000 more than a similar piece of paper from City College? Why might a BMW cost $25,000 more than a Subaru WRX with equally fast acceleration? Why do “sophisticated” consumers demand 16-gigabyte iPhones and “fair trade” coffee from Starbucks?

If you ask market researchers or advertising executives, you might hear about the difference between “rational” and “emotional” buying decisions, or about products falling into categories like “hedonic” or “utilitarian” or “positional.” But Geoffrey Miller, an evolutionary psychologist at the University of New Mexico, says that even the slickest minds on Madison Avenue are still in the prescientific dark ages.

Instead of running focus groups and spinning theories, he says, marketers could learn more by administering scientifically calibrated tests of intelligence and personality traits. If marketers (or their customers) understood biologists’ new calculations about animals’ “costly signaling,” Dr. Miller says, they’d see that Harvard diplomas and iPhones send the same kind of signal as the ornate tail of a peacock.

Sometimes the message is as simple as “I’ve got resources to burn,” the classic conspicuous waste demonstrated by the energy expended to lift a peacock’s tail or the fuel guzzled by a Hummer. But brand-name products aren’t just about flaunting transient wealth. The audience for our signals — prospective mates, friends, rivals — care more about the permanent traits measured in tests of intelligence and personality, as Dr. Miller explains in his new book, “Spent: Sex, Evolution and Consumer Behavior.”

Suppose, during a date, you casually say, “The sugar maples in Harvard Yard were so beautiful every fall term.” Here’s what you’re signaling, as translated by Dr. Miller:

“My S.A.T. scores were sufficiently high (roughly 720 out of 800) that I could get admitted, so my I.Q. is above 135, and I had sufficient conscientiousness, emotional stability and intellectual openness to pass my classes. Plus, I can recognize a tree.”

Or suppose a young man, after listening to the specifications of the newest iPhone or hearing about a BMW’s “Servotronic variable-ratio power steering,” says to himself, “Those features sound awesome.” Here’s Dr. Miller’s translation:

“Those features can be talked about in ways that will display my general intelligence to potential mates and friends, who will bow down before my godlike technopowers, which rival those of Iron Man himself.”

Most of us will insist there are other reasons for going to Harvard or buying a BMW or an iPhone — and there are, of course. The education and the products can yield many kinds of rewards. But Dr. Miller says that much of the pleasure we derive from products stems from the unconscious instinct that they will either enhance or signal our fitness by demonstrating intelligence or some of the Big Five personality traits: openness, conscientiousness, agreeableness, stability and extraversion.

In a series of experiments, Dr. Miller and other researchers found that people were more likely to expend money and effort on products and activities if they were first primed with photographs of the opposite sex or stories about dating.

After this priming, men were more willing to splurge on designer sunglasses, expensive watches and European vacations. Women became more willing to do volunteer work and perform other acts of conspicuous charity — a signal of high conscientiousness and agreeableness, like demonstrating your concern for third world farmers by spending extra for Starbucks’s “fair trade” coffee.

These signals can be finely nuanced, as Dr. Miller parses them in his book. The “conspicuous precision” of a BMW or a Lexus helps signal the intelligence of all the owners, but the BMW’s “conspicuous reputation” also marks its owner as more extraverted and less agreeable (i.e., more aggressive). Owners of Toyotas and Hondas are signaling high conscientiousness by driving reliable and economical cars.

But once you’ve spent the money, once you’ve got the personality-appropriate appliance or watch or handbag, how much good are these signals actually doing you? Not much, Dr. Miller says. The fundamental consumerist delusion, as he calls it, is that purchases affect the way we’re treated.

The grand edifice of brand-name consumerism rests on the narcissistic fantasy that everyone else cares about what we buy. (It’s no accident that narcissistic teenagers are the most brand-obsessed consumers.) But who else even notices? Can you remember what your partner or your best friend was wearing the day before yesterday? Or what kind of watch your boss has?

A Harvard diploma might help get you a date or a job interview, but what you say during the date or conversation will make the difference. An elegantly thin Skagen watch might send a signal to a stranger at a cocktail party or in an airport lounge, but even if it were noticed, anyone who talked to you for just a few minutes would get a much better gauge of your intelligence and personality.

To get over your consuming obsessions, Dr. Miller suggests exercises like comparing the relative costs and pleasures of the stuff you’ve bought. (You can try the exercise at nytimes.com/tierneylab.) It may seem odd that we need these exercises — why would natural selection leave us with such unproductive fetishes? — but Dr. Miller says it’s not surprising.

“Evolution is good at getting us to avoid death, desperation and celibacy, but it’s not that good at getting us to feel happy,” he says, calling our desire to impress strangers a quirky evolutionary byproduct of a smaller social world.

“We evolved as social primates who hardly ever encountered strangers in prehistory,” Dr. Miller says. “So we instinctively treat all strangers as if they’re potential mates or friends or enemies. But your happiness and survival today don’t depend on your relationships with strangers. It doesn’t matter whether you get a nanosecond of deference from a shopkeeper or a stranger in an airport.”

Copyright 2009 The New York Times Company