Alexander van Elsas’s Weblog on new media & technologies and their effect on social behavior

There seems to be some discussion on TechMeme about a research report just released by Burst Media. The report describes the behavior of consumers watching on-line video and their perception to advertisement placements within it. Research results, can we call it results since Burst media isn’t exactly an independent research firm, show that a) people love on-line video, especially for entertainment and b) they hate advertisement and in half of the cases abandon watching the video all together.

Astonishing conclusions. We watch video’s to be entertained, wow, didn’t know that. Everyone citing the research says that it finally shows consumers aren’t interested in advertisement placements in on-line video. Yet another unexpected result. We have seen this all before folks. And people have taken adequate measures against it. It’s called the remote control, and dvd recorder. The setting? Old fashioned regular TV broadcasts which are interrupted by fairly useless ads all the time. But as they provide the TV watcher no value whatsoever, he zaps away to another channel. This is exactly what happens on-line too. The situation or human behavior isn’t any different really. Advertisement within on-line video’s do not provide the user any value, so he zaps away from them. It is sort off pathetic really. The user walks away from advertisement on TV, let’s harass him some more on-line.

I wonder what the average marketeer does when he comes home after a long day of work and turns on the TV or watches some on-line video’s. Do you think he is sticking around with all the commercial breaks. No way. But he is getting payed to think that consumers like his commercial interruptions and that they dare not zap away from his sponsored message. Marketeers are idiots, and I don’t mean you of course, but the guy from that other company.

Does that mean there is no room for commercial messages or advertisement on-line? Of course not. But marketeers need to stop thinking that they can run ineffective tricks from old media in the “new” on-line world hoping they will be more successful there. Think again. There is one constant factor in the new world that was already there in the old world. It is the consumer. Human behavior doesn’t change that much simply because it is now on-line. If they didn’t like your message before, they won’t like it now either. The rules haven’t changed, just the equipment and the playing conditions.

Marketeers need to start thinking about new ways to get customers involvement. Instead of broadcasting a message they need to think about customer engagement (I like that term much better than brand engagement), customer experiences, and customer value.  Forget about bannering, cpm, and other fairly irrelevant metrics to measure the success of a campaign. Think about how you can deliver your customer an experience he or she won’t forget. Think about how you can start interacting with your customers in ways you can’t in the physical world. Think about delivering true value to your customer.

These simple, yet really hard to achieve, goals can never be met by bannering or pre-roll video advertisement. You and your advertisement are standing in the way of the desire of the customer to watch that video. Yes, you are getting attention, but it is negative, not positive. But if you understand the things that are important to your customer, then a new world of opportunities opens up. You can deliver him the content he wants, in the detail he needs it. Think vertical instead of horizontal. Think micro instead of macro. Think targeted instead of large. Think social instead of a-social. Think content, not banners. Let your customers interact, they love it. Try to interact with them too, and do this every day, with respect, sincerity, and with no other intention than to help and to provide the customer with value.  Ask yourself a simple question, how do I want to get treated by a company that provides me services? Make sure you do better than that. Read blogs or books from people that have smart things to say about that.

Tara Hunt writes wonderful things about Social Capital, perhaps translated into the respect you need to earn to engage with consumers. Try the link below for a video presentation she did last year in the Netherlands.

Or read this post by Rolf Skyberg from eBay, talking about customer engagement.

There are so many opportunities the on-line world can provide marketeers to get in touch with their customers. But they need to understand human behavior first. Get a grip and quit harassing us with “sponsored” messages that do not provide me any value.

I do not dislike advertisement. If you are a regular reader of my posts, then you might get that impression. For example, I have started a countdown for the downfall of Facebook when they first mentioned their stealth ad system.

It is not advertisement I dislike, it is the effect advertisement money has on current web 2.0 business models I don’t like. It is the easy way out for investors and service owners. Provide something for free, and as a user deal with the consequences (you get ads). The current ad word auction model and underlying pay per click is fraud sensitive, and enforces walled gardens. The revenue generation machine of a “free” web 2.0 service is based upon locking users in the platform. Getting them in, and not letting them out. Of course, you need really massive amounts of traffic in order to get enough clicks to make an advertisement revenue living. But with size, operational costs increase, and with increase costs you need more traffic and lock in users harder. It is a deadlock situation where the user, the advertiser and service owner are trapped into. And a deadlock situation where everyone is held hostage rarely provides real winners. I have discussed other possible business models earlier, and will elaborate on that in the future. Some suggest that there lies an opportunity to offer customers premium ad free services, replacing the ad model. I have written about that as well, but from a different perspective. Don’t let people pay for not getting ads, let them pay for value they get.

We should try to rethink this advertisement model by taking the user perspective. It is his valuable attention the advertiser is looking for in this attention economy. If attention is a scarce commodity and economics is needed to control this, then the economic laws better start making some sense out of this user.

So what do Internet users do most? I’d say they spent most of their time on activities like: search, discover, interact with others, share things, publish, and buying and selling stuff. During some of these activities ads are good, and in some they are bad.

Lets start with the obvious one, search. Google gets that right. Search can be monetized with ad revenues. If a user is searching for something then a sponsored link addresses the need of the user. And as John Battelle points out, all search entries (often not controlled by the advertiser) are important brand building aspects. Let’s make no mistake about the value of this type of advertising. The IAB just reported a new all time high Internet advertisement revenue this quarter, passing the $5.2 Bln and up 25% with respect to last years 3rd quarter.

But lets also not forget that the majority of these advertisement revenues go to Google, as they have reported a $4.3Bln revenue the 3rd quarter, an increase of 57% with respect to last years 3rd quarter. So Google takes perhaps 75-80% of all on-line advertisement revenues and they do it with search!

Discovery is another activity. Whereas the goal of search is to find, with discovery the process is the goal. Earlier reports show that Facebook users do a lot of discovery. They look at other people’s profiles, pictures and interact with applications. Profiles feel as private space to a user. Combining those with ads is probably not a good idea. Building up social graphs will provide valuable information about relations, bu it cannot be exploited easily within the same network as the user is likely to distrust the motives of the advertiser. It becomes what Nicolas Carr has called the Social Graft. Discovery in relation to Facebook applications is different. Here is a chance to provide the user with value (through the application) and combine it with branding or advertisement activities.

People love to interact. A profile in a social network is filled with information about the way I would like to be viewed, it doesn’t necessarily depict reality. But interaction is more pure. It reflects much about me and my relation to the one I interact with. As interaction is mostly personal it is difficult to combine it with advertisement. The “this message was sponsored by” advertisement is invading my private space and won’t do. The same thing goes with more subtle forms of SocialAd advertisement. If I mention in my activity feed that I went to the movies, this might have value to my friends. But having this news being accompanied by a complementary SocialAd doesn’t provide my friends with value.

What SocialAds try to do is help advertisers influence word of mouth advertisement. Amazon makes a fortune out of it. If I get a recommendation for a product from a friend it will be worth much more than an advertisement from the product owner. We all know this phenomenon. Tara Hunt describes very well how advertisers should be connecting to communities.

It starts with trust and the buildup of social capital. It is about listening to your customers, not talking. But an advertiser who buys a Facebook page does not have trust in the community just by being there and adding fans as a friend. It needs to listen first, it needs to build up social capital within the community. But here is exactly where I feel Facebook might take a false turn with its SocialAds and Beacon scheme.

These fans are not fansumers and displaying their like of a brand or product in their newsfeed is hardly a “word of mouth” advertisement. In essence it is more like a personalised billboard which loses value very quickly as friends will see it for what it is, not what it was meant to be (an advise from a friend).

So let’s try to get rid of the illusion that the advertiser has active influence on word of mouth via SocialAds. Direct interaction with your customers is far more influencing. Word of mouth in the physical world is based upon a different process. By exchanging thoughts, emotions, speech, touch, look, feel we have meaningful interaction. In this interaction a recommendation from a friend builds up and creates value for me. By agreeing or even disagreeing the advise of our friends gains importance. This interactive process leads to word of mouth advertisement. It is futile to think that an advertiser can influence this process directly, unless they are in direct contact with their customer. People are thinking for themselves, better deal with it. The whole power of word of mouth advertisement lies in the indirect influencing.

There is one exception to the interaction activity. If a user is publishing, or self-expressing himself to a bigger audience, then advertisement may have value. It can create a podium for the user to self express and find an audience. Like an artist being sponsored by a brand.

That leaves buying and selling. Here advertisement can play an important role. People looking to buy or sell something won’t mind if advertisement is added to the orientation or transaction phase. Advertisement adds value to the user action, especially in the orientation phase where it acts as a specialised for of search.

So what do you think about this? I’m interested in hearing if you know examples where advertisement creates value for the user (not including search). Do you think that SocialAds will add value (besides making services “free” to its user?

There are $20 Bln reasons to get advertisement right. Google probably takes up 75%, leaving the rest of us with $4Bln to figure out how to apply advertisement in such a way that it draws the attention of the user and actually provides him with value. We better start working on it.

After I wrote my earlier post called “The flaws in web 2.0 and how to correct them” I was surprised by the really positive replies and also the quality of the discussion that seems to have been triggered by it. There are some really smart people thinking and writing about the current state of web 2.0. Let me provide a quick summary of the responses and then proceed into deepening this discussion.

Chris Clark told me I was missing the point as he correctly points out that web 2.0 isn’t just about Facebook or MySpace. Web 2.0 has provided companies a way to have meaningful discussions with their customers leveraging technologies such as Wiki’s, Blogs. He also mentioned that user generated content is becoming to rival the quality of in house productions.  Chris, you are right of course. I focused in my post on the user perspective, but if you turn it around and look at a company’s perspective, then things have definitely become better.

Kirill Bolgarov agreed with most of the things I said and states that “those who rule the party of social networking are smart enough to somehow force the evolution of the networks into something more like what you have described..”. Kirill, I believe that these changes will evolve from users turning away from closed networks to more open networks, and by service creators that will ultimately understand what’s really important

Jordan Mitchell states that “my sentiment is that the problem is that social networking really ought to be a feature of the Web rather than a destination”. He also feels that the people web should be a different layer from the content web. Jordan, I like that thought. It enforces openness, instead of walled garden social networks.

Rian agrees with me on my statement that we aren’t getting as much value out of a social network but has a very different approach on why that is the case. He argues that the network is the need, but that current user experiences doesn’t allow them to tap the full potential of their networks. He suggests that in an open social network the trick becomes how to identify the most important actors and tap into the benefits related to them. He writes smart things, check out his earlier posts on the matter. Rian, although I agree with your analysis that it would be beneficial to let users become more aware of relationships in order to tap into the useful resources, I also feel that it still addresses only one aspect of the equation, me finding other interesting people. But true interaction is not just about me finding things, it is also about me giving something valuable to the network. Professionally I might be interested to find many smart people that think about changing web 2.0 into something better, and interact with them (as we do now!).  At home I will be more interested in interaction with my friends and family, a much smaller group of people. No need here to have a large network, just simple and elegant ways to be interacting with them across all the possibilities on the web.

Rolf Skyberg wrote an excellent post in reply to mine called “Trancending my human limitations through the web“. He not only wrote very nice things about my blog (thank you!), but also stresses the point that humans love to interact. Internet supports that with things like relative permanence, instant perception and near-boundless audiences. But social networks suck at it. Why? Rolf states it’s money. If you give a product away for free there is always a monetizing scheme which provides the companies with a strong incentive to build a closed large network. The solution for the user of course lies in a large OPEN network. Rolf, I agree with you on this. It is precisely for this reason I find the possible Microsoft investment in Facebook a very risky strategy. it will increase ad pressure on the user, and they won’t like it a bit.

So how about taking this discussion one step further? Can we use the positive energy and smart thinking around us to draw up a high level design of a new web?  I’d rather not call it web 3.0 (tacky right?).  It would be an interesting experiment to see if we can come up with some great idea’s that might help service creators to develop services that are adding true value to the user. We would need to consider human needs first, then go into the ways of supporting those needs using tools and technologies. But we also should be thinking about  monetizing it in such a way that the user and the service creator and advertiser benefit from it (there is no such thing as a free lunch right?).  If there is enough need for it I would suggest we all start writing some articles about it the coming weeks. Let’s see what happens with it. I will give it a go and try to write a post on it once a week.  Now all we need is a catchy title, something that will inspire us to write. How about “Design of an Open Social Interaction Network”? I’m open to better alternatives, post them in the comments section and we can see if we can improve on this.

Good luck, and let’s surprise each other with some excellent posts on the “Design of an Open Social Interaction Network”. Hope some of you out there like this experiment and join in.

Just saw a very nice and complete overview of all the different presentations at Eday in the Netherlands. Thanks to Frank Janssen of FrankWatching for this. One that stands out for me is the presentation by Tara Hunt, called “how to make a gabillion dollars on community marketing”. Tara Hunt and Chris Messina, are the founders of Citizen Agency. Her message ‘People don’t buy brands, they buy hope, stories, memories, necessities is well known. The video can be watched here, skip past the first minute or so if you don’t speak Dutch. The presentation can be found here, although it isn’t any good without Tara presenting it. I reported on the Rolf Skyberg presentation on “web 2.0: how did we get here and what’s next” and on earlier, but there is lots more to look at in the overview. Enjoy.