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Tuesday, December 29, 2009

Salute to the Gladwellian Decade (And Many More)

I. Huh! The decade is drawing to a close, isn't it? No Y2K stuff to worry about this time around. But for some reason, reflecting on this decade reminds me that Malcolm Gladwell wrote not one, not two, but three outstanding books during this period: The Tipping Point (2000); Blink (2005); and Outliers (2008).

If you're still trying to procrastinate your way through the remaining days of the year, I highly recommend Gladwell's What the Dog Saw (And Other Adventures). I picked this up in a bookstore in Montreal, and upon boarding my flight, I was a bit let down when I realized that it's just a compilation of Gladwell's best New Yorker columns over the years. The concern was unwarranted. The collection is an awesome glimpse into the Gladwellian mind, covering interesting people and hard-to-crack policy issues, often with the aid of new mental models or metrics.

Nuances of book marketing aside (he's a genius), Gladwell's success as an author is closely tied to the importance of the subject matter he covers, and his habit for prescient choices. In my opinion, The Tipping Point is far from the best thing Gladwell ever wrote, but it's definitely the most popular. The phrase has, of course, entered the popular lexicon on the strength of Gladwell's work. One of the keys to that book was the case study on New York City policing, and the major turnaround in crime rates there. Gladwell covered the "broken window" theory of policing, and numerous other issues. What amazed Gladwell (and the rest of us) is that the crime rate there continued to fall after much of the work had seemingly been done. It's as if the New York crime rate drop went from "problem solved, thought we never would see the day" to pushing even past that, to a remarkable low level of violent crime that many never thought possible. This year, the NYC murder rate has reached record lows: the lowest number since "Mad Men roamed the streets" in the early 1960's. Perhaps just more proof that although The Tipping Point wasn't Gladwell's very best work, writing about tipping points like NYC crime rates falling was his best bet.

II. (Which brings me to...) Next point. A "real" journalist really can release a compilation of his best research and sell a million copies in hardcover. The work is so good because it's so thorough. It's real journalism: investigative, pop science, and inquisitive. Just the opposite of what we see here in the much-self-vaunted blogosphere.

Outside of Seth Godin (Small is the New Big) you won't see people snapping up tons of copies of bloggers' compilations of their best posts between two glossy covers. Reason: most of the blogosphere is just not up to the standard of research you find in the amazing work of reporters like Gladwell.

So it's become popular to deride the efforts of journalists and newspapers, to portray them as unsupportable, unmonetizable, and obsolete.

But the decline of traditional newspapers and journalism really only comes down to one issue: the subsidy problem, and its close cousin the monetization problem.

There's never been a single, static model for taking the funds from more popular forms of information, and the means of having advertisers pay for one type of exposure that helps media companies operate.

Internet companies are supposed to be so different from old media companies, but they aren't. Both share this much: the revenue model is more or less disconnected with the products and services the companies offer, and from the pricing of the content.

Digital or not, media will not ultimately go belly up.

And in the meantime, a lot of the chitchat produced by amateurs will prove to be either worthless to everyone because it's junk, or valuable to a select audience (nichey). Against either form, true popular journalism will loom relatively large, and will be borne out by the ability of figures like Malcolm Gladwell and Michael Lewis to repurpose previously published material and actually charge for it.

It's no secret that foreign correspondents, investigative journalism, and serious research don't always pay for themselves, but they never have. Responsible members of the business community have always seen to it that money was found to keep "the press" going, even though many elements of "the press" were loss leaders.

Money gets made somewhere, and it funds the arts, quality research, and much much more.

Analogously, Google makes a bunch of ad revenue from, say, a new ad format in its DoubleClick division, and over there in another part of the company, engineering resources are found to work on a new programming language, or at making browsing more efficient, or making free mapping available to developers and end users alike.

So again - are old and new media all that different?

There is nothing wrong with admitting that there will be a disconnect between monetization and content, and that subsidies happen within large media organizations, with the ultimate aim (in some cases) of creating a respectful work environment, and a better society.

And as the smartest minds in digital media go to work on the problem of helping all manner of publishers do a better job of monetizing, the "monetization problem" will get solved for many, as sure as it did in the pre-revenue Google, pre-revenue Facebook, pre-revenue Twitter, etc.

Long live media, digital, traditional, or otherwise. There are healthy trends in the works; flux and change don't necessarily equate to the "death" of anything important. Profitability will re-enter the lexicon soon -- if indeed it ever truly left.

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Posted by Andrew Goodman




Friday, November 06, 2009

PPC Has Always Been the Wrong Term

It may seem like a small point, but "pay-per-click" was the nickname given to paid search advertising back when it started out, but it only describes a pricing method, not the nature of the media or what we seek from it. (In the proto-days of that same technology, "paid keywords" or "buying keywords" was another way of describing it.)

I was reminded of this whole mental muddle today reading the headline from an email solicitation, something about "getting more PPC without using Google".

But that whole line is kind of old hat. It's the come-on that opportunistic, non-search-based ad platform companies used to sell their crummy, remnant, and sometimes fraudulent contextual text ad inventory. Sometimes it couldn't have even been described that neatly. It was traffic, and you paid for the clicks, and potentially you used keywords to guide the system towards certain publishers, but that was about it. You might as well have paid the effective CPM rate, as bid on clicks. Didn't matter.

That's why I always advocated paid search as the term of choice for people who really wanted to go after clicks from ordered results placed near search engine results, but it scarcely matters what I advocate! -- people will use all kinds of terms.

SEM is another term that arose. Agenda-setters in the business tried to remind everyone that paid search (or "PPC") is one sub-type of SEM (search engine marketing), and SEO (on the "organic side") is another sub-type. But the fight to make SEM exclusively the global term, and not to be used as synonymous with PPC or paid search, was lost. SEM is often used interchangeably with PPC or paid search.

No matter. With all of these nomenclature battles being unwinnable, we should turn our attention to the whole reason "PPC" was so attractive as a pricing mechanism. It's because it represented a happy medium between CPM (paying only for impressions -- "cost per thousand impressions") and CPA ("cost per acquisition" -- paying for lead conversions or even revenue-generating sales conversions).

You can draw up equivalents across these mechanisms, and measure or express them all for your keyword (paid search) campaigns. So the click isn't anything special. It can be expressed in its CPM equivalent and you can and should also be measuring ROI, ROAS, or CPA.

Indeed, according to some scholars [see "Greedy Bidding Strategies for Keyword Auctions"], the most rational strategy for bidding in a digital media auction would take you straight to CPA or revenue if that was possible. If you could bid directly on the customer acquisition or revenue, you would. (And in fact, that's what some forms of bid management automation attempt to do, at one or two removes. And it's what manual campaign management also attempts to do, painstakingly.)

But step back further. Are search, keywords, or clicks inherently special? Why the drive to distinguish them from other forms of media? Is it for what they are, or what they represent?

It has to be the latter. They represent potentially the most extreme (and measurable) form of granular targeting and flexible bidding, of a certain type. This is reflected in the sky-high effective CPM rates for some keywords.

But that means that all of this distinguishing one type or another is done mostly for economic or practical reasons.

Search and keywords (and clicks) fall into the general category of auction-based digital media. Whether we're bidding on clicks, acquisitions, impressions, or other, the universe of digital media is amenable to similar tests. From a rational bidder's standpoint, there should be no inherently good or bad media, nothing inherently "creepy" or "wrong," nothing inherently above reproach either.

That's mostly true. It's not entirely true. (Dropping ad-laden anvils on prospects' vehicles is interruption media, and some companies would pay for it, but it's stupid and illegal.) But isn't it a good starting point for analysis?

"PPC" doesn't matter per se. So pitches like "now you can get 'PPC' from other channels than Google" shouldn't have any special weight. You shouldn't be looking too hard for that inventory if your economic criteria show it's not going to pay off for you. Nor should you have been ignoring it all along just because you thought that "PPC" or "Google" were special for some inherent reason.

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Posted by Andrew Goodman




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