A Misfire in the Dark: How Not to Do Online Media

There's been some hype lately for wowowow.com, a founder-funded web site for "accomplished women over 40" that launched last weekend (press release here). Last week it was featured by the New York Times, PaidContent.org, and Mashable, among others; it was on Good Morning America today. Notably, the founders are all women in media. But unfortunately for the many people who think wowowow is a promising concept and would like to see it succeed, the founders are all from traditional media, and the old-fashioned business assumptions they bring from that environment result in a "me-too" web site that misses many opportunities for thought leadership and innovation.

Wowowow is what happens when traditional media thinking intersects the online medium without much thought to the dramatically different business environments the two platforms present. And by the way, I don't mean to pick on wowowow specifically. It's typical of many middling web businesses these days, and for that reason presents a good object lesson in how not to build a media web site in 2008.

In traditional media, because of high unit costs for production and distribution, it makes sense to start with a narrowly targeted, high-value concept--such as serving the information needs of affluent older women. Your brand identity is tightly connected with a restrictive definition of audience. You don't want to waste resources creating products consumed by people your advertisers don't want to reach. With traditional media, the advertising opportunity is the starting point for the business concept.

Online is the opposite; it's all about scale. While the low barrier to entry online makes it easy to create niche sites such as wowowow, the greatest rewards are reserved for those who tap into the web's extraordinary scale opportunities. So online media is about inclusivity and the starting point is the audience. The key to delivering value is the ability to segment that audience for advertisers who want to reach niches--self-segmentation through content affinity, inferred segmentation through behavioral targeting, demographic segmentation based on profile data...whatever.

The economics of online favor scale and online technology facilitates segmentation. Therefore the web also favors diversity, a larger pool from which to segment. Demographically monotonous sites such as wowowow come up short.

Interactivity also differentiates the online medium from its traditional ancestor. People who prefer to receive content in a passive way gravitate toward the one-way, top-down mode of traditional presentation. Those who consume content online see themselves as co-creators of the site experience and expect a conversation. While wowowow allows comments on the articles it presents, it doesn't give the audience a full seat at the table when it comes to generating content and connecting with one another. Related, the web is about democracy. You create content, I create content; we share opinions and debate basically as equals. Instead of any of this wowowow has an old-school, nose-against-the-glass feel as the audience mainly observes the antics of the celebrity founders and their pals.

Traditional media is also segmented by medium: video is on TV, audio is on radio, print is in newspapers and magazines, and the various media rarely intersect. Wowowow honors this tradition by being text-centric, rather like a web site from the last century. But fast-forward to 2008 and you'll notice that the best sites are all polyphonic, telling their stories with a mix of audio, video, text, slides, interactive graphics, and more. Check out CNN's forward-thinking design, for example, where content on a variety of platforms, by both paid staff and citizen journalists, coexists on the home page. The goal is to tell the story through the medium the audience will find most appropriate and compelling for that message.

Finally, the web is also about technology. This manifests itself in many ways, from the how the site functions to content about the tech-driven gadgets we all use. Wowowow seems almost devoid of technology; I looked in vain for a bit of AJAX and couldn't even find an RSS feed. Paradoxically, the founders seem to believe their online audience are stuck in the age of rotary phones, film cameras, 45 rpm records, and ViewMasters. You have to believe, if your audience is online, that they have some interest in technology and appreciate good web design. Show them some respect with a technically competent site that invokes the wow factor.

The web is all about innovation, and innovation is all about overcoming fear of failure and embracing risk. Sites like wowowow seem a bit timid to let go of business ideas that succeeded back in the day of traditional media. Concepts about demographic targeting or content subject matter alone aren't sufficient to drive online innovation. You have to insert these into a bigger picture vision of the medium and its future.

A Growing Role for Social Media

A recent blog post by Forrester analyst Jeremiah Owyang on his report “Online Community Best Practices” has generated an interesting comment thread that not only contains the sorts of tips teased in the title, but also highlights current thinking about communities as platforms for both media and marketing.

The post is primarily an ad for the full report, which is only available to Forrester clients (I haven’t read it). That document is based on interviews with 17 community leaders and aims to uncover commonalities in successful online communities. However, Owyang shares a few high-level tips for free. “Above all,” he advises, “remember that control is in the hands of the members, so put their needs first, build trust, and become an active part of the community.” The most successful communities were created by people who “acted more like a host, rather than a policeman,” Owyang observes.

Once they launch a community many companies face hurdles making it grow, he continues. Owyang recommends thinking of a community as a product in development. To build and grow it you need to define the objective, create a roadmap, assemble the right team, and be prepared to adjust plans as needed. To maximize the chances of success launch the community with backing from its most enthusiastic members and stay engaged as it grows, he advises.

The blog also shares a slide from the full report that correlates various stages in the community’s lifecycle to different growth rates. In the early strategy and research phases growth is slow. Member activity ramps up steeply beginning with launch and proceeding through kick-start, growth, and ongoing management—what Owyang calls the community’s “adolescence.” After a time, following the classic “S-curve” of product adoption, the community reaches “maturity,” when increases in activity are only incremental. At this point the sponsor’s role shifts to ongoing management and continual improvements, Owyang says.

As enlightening as Owyang’s brief summary of the report are some of the comments it generated. Among the highlights:

• Unrealistic expectations can doom a community project. It’s important to get everyone on board with achievable expectations early in the process
  
• Focus on engaging, useful content instead of pushing your brand objectives too hard
  
• Get management on board with a community by demonstrating ROI
  
• Communities are about people first; the underlying products or services aren’t really important
  
• Successful communities don’t succeed on their own, they require planning, management and marketing commitment
  
• Community growth may not always be a smooth curve; often there are big spikes that correlate with, for example, new product releases or marketing initiatives. It’s important to anticipate spikes and be prepared to deal with the issues they create, such as site performance, moderation and support needs, and spam.

Both Owyang and his readers also share insights into the future direction and value of the social media movement. Owyang foresees it becoming a core business function, almost like email. At some point, he says, “online social communities will just normalize, and everyone will say ‘duh’ this is no-brainer, improving communication with customers is a core function of every company.” A commenter agrees, “online communities are simply the next iteration of customer communications,” one that empowers members to interact directly to one another, in addition to dialogue with the community host. Another reader ventures that communities are “the future of marketing for many companies.”

Having both started and managed online communities I agree with these insights and am glad to see more high-level thought and discussion around community dynamics. Above all, anyone contemplating using a community for marketing or content generation needs to do so not reactively--because it’s a fad or because a competitor has one—but as a thoughtful and purposeful attempt to solve specific business problems, such as the cost or content or brand engagement. Communities both large and small are rapidly rising features in the online landscape; social networking is joining ecommerce and media as a true wealth-making “killer app” of the digital age. For those of us making it happen it’s exciting to join the discussion about the big picture and help frame the vision of how best to channel this powerful force for change.

Measurability Is Key for New Content Products

While the web provides an advertising environment with the potential for unparalleled visibility into marketing spend and ROI, tools to help agencies and advertisers make the most of the opportunity have lagged behind. Many companies are working on pieces of a solution, but few have the scale to implement products that cut across the highly fragmented online landscape and gain critical mass.

Last month Sapient, the online marketing and consulting firm, released results of a survey that suggests the rapid growth of Web 2.0 content and presentation options is only making the problem worse. “Marketers lack the tools necessary to optimize their marketing efforts across the full spectrum of digital channels,” Sapient concluded. Survey respondents were particularly interested in social media, but found those results hardest to track.

The respondents were comfortable with their ability to measure responses to email and search marketing efforts and wanted comparable accountability for spending in other channels. They also wanted reporting that provides “apples to apples” results across all channels to facilitate ROI-based spending allocations, and rapidly updated data that allows near-real-time spending adjustments to capitalize on emerging opportunities.

The takeaway for anyone managing a media site: it’s increasingly important to build measurability into new content products. Until a grand, cross-channel solution comes down from the likes of Google or Yahoo, your ability to provide metrics will directly correlate to your ability to monetize. Advertisers are demanding better measurability and for now, they’re leaving it to you to solve the problem.

Next-Gen Advertising: Technology vs. Business

You may have seen the recent comments by Wenda Millard dissing both Yahoo's and Google's huge, ongoing efforts to reinvent advertising for Web 2.0 and beyond. Wenda used to head Yahoo's ad sales efforts and is now president of media at Martha Stewart Living Omnimedia. She chided both Yahoo and Google for a one-dimensional view of the future of advertising that's too focused on technology, at the expense of advertisers' business needs.

Advertising, she observed, is "not a business only of science. With the Google/DoubleClick combination, and the potential Microsoft/Yahoo combination, it’s like the scientific community is taking over the advertising business--and the ad business is not about algorithms.”

Google and Yahoo are key to the future of online advertising because they command such huge chunks of the online audience. Although many others are interested in evolving the advertising model, most lack the scale to get much traction in an industry where the changes they advocate will require a large redeployment of resources (MySpace could be an interesting exception).

In the last several weeks I've talked to some of the folks at both Google and Yahoo who are working on "Advertising 2.0" projects, so I can verify first-hand that both companies are taking the technology-first approach to their initiatives. The role of business people who understand the advertiser-agency dependency and bigger-picture brand advertising needs varies, but seems a bit higher profile in the Yahoo effort. Both companies, but especially Google, identify as technology businesses and want to present technology solutions.

In advertising this is an especially tricky aspiration. If the problem were straightforward to solve, online advertising advances would have kept pace with those of content and UI...yet they haven't. Online, technology is the sine qua non of innovation, but all the amazing technical possibilities need to be channeled into productive problem-solving and business models to bear fruit.

Part of the complexity comes from the necessary role of ad agencies. Looking at the industry from the 50,000 foot level, agencies seem ripe for disintermediation by more efficient technical solutions. But in reality, they have a vital role in the ecosystem. For media properties they simplify penetration; for advertisers, they open the door to technologies and products that many individual clients are too unsophisticated to utilize on their own. Agencies allow advertisers to outsource many technical complexities, and therefore are more valuable--not less--in the world of Advertising 2.0.

Also, a lot of activities occur under the "advertising" umbrella. Some, such as the straightforward lead generation represented by programs such as AdWords and Yahoo Search Marketing, are spectacularly suited to technology innovations. Others are trickier. Certainly technology can help with the accountability and measurability advertisers demand, but what about engagement? Are these new programs truly seeking to uncover and solve merchants' deepest needs from the media community, or are they aiming to optimize products that are actually flawed vestiges of a prior-day mindset--such as banner ads. The people I met with at Google and Yahoo seemed reluctant to innovate deeply enough. That's one reason I'm wondering whether MySpace and Facebook may end up eclipsing today's moonshot-level efforts to build the ultimate buggywhip.

Yahoo: Time for Act 3

With all the drama around Yahoo this month I’m glad I’m only watching from the sidelines. However things turn out, it’s certain that the company that emerges will be quite different from the one that has disappointed investors, employees, and, too often, users in recent years. Of course, the multibillion dollar question is whether the rapid changes will solve Yahoo’s problems or exacerbate them.

As to a Microsoft acquisition, if scarce resources were the problem—as they often are when early-stage companies are acquired—a buyout could be a solution. Microsoft’s market cap is close to double Google’s. But even in its current reduced circumstances, Yahoo has never lacked money or people to throw at perceived problems. Instead, the shortfall has been in identifying the best opportunities and efficiently deploying available resources to capitalize on them.

Perhaps Microsoft could help there, too. Despite some well publicized flubs no one doubts it’s fundamentally a well managed company with deep technical expertise. Unfortunately, though, history has shown Microsoft’s strength is in software, not media. There’s a huge question mark around the proposition that two companies with faulty radar and shaky track records could, if combined, somehow challenge the market powerhouse.

Yet it’s equally hard to picture the Yahoo that exists today turning itself around as an independent entity. The final tally isn’t in, but so far the names of layoff victims popping up on the web include few of the operating executives who have consistently failed—seemingly without consequences--to set coherent strategic agendas, execute against goals, and raise profits. Maybe bigger changes are coming, but Yahoo needs to understand that dramatic corporate transformation starts at the top, not the bottom. Getting rid of 1,000 mid-level functionaries might raise profits a bit but it won’t revitalize strategy, repair morale, kickstart innovation, or operationalize abstract theories.

If resurrection sounds impossible it’s worth recalling that Yahoo did it once before, in the wake of the dotcom meltdown. In September 2001 the stock bottomed out just above $4 per share (split adjusted), and a year later it dipped almost that low again. Then the price grew almost 10x over the next three-plus years; however, it’s been in fairly consistent decline (until the Microsoft offer) since January 2006.

I joined Yahoo early in the turnaround, in February 2002, and left in October 2005, just before the peak. Watching the company recover and grow—and then seeing the seeds of future failure begin to take root—was a vivid demonstration of management lessons I’ll apply for the rest of my career. Back in 2001 it was far from certain whether Yahoo would survive at all or become another dotcom casualty, the next Webvan or Pets.com. A raft of the company’s most senior executives departed and Terry Semel arrived in the spring of 2001 to launch Yahoo’s second act.

These days Terry’s name is typically associated with Yahoo’s recent decline, but back then he brought a bracingly fresh perspective: to focus Yahoo as a media business whose primary monetization strategy was advertising. Previously advertising was in the mix but the company was also drifting toward low-margin web services. Terry immediately went to work staffing up with media pros who recast Yahoo in a strikingly different and more business-centric mold than the original feel-good dotcom culture. Inevitably there were clashes between company veterans and the newcomers. Most of the time a good business case prevailed over tradition; after all, at that time we all felt that the very future of the company was at stake.

As Yahoo prospered the pendulum began to swing. We made acquisitions and didn’t do a good job of melding their benefits with our winning Yahoo culture. As revenue ballooned, managers became blasé about profits. For instance, a VP I reported to once told me the $10 million one of my projects added to the bottom line only amounted to a “rounding error.” I joined a lean company (2,000 employees in February 2002) where we product managers prided ourselves on efficiently producing the output of two or three people in traditional businesses. By the time I left the attitude had reversed and we were hiring two or three heads to cover work that should have been done by one.

Yesterday’s dotcom darling became today’s dog. Having a nontechnical leader at a technology company led to too much delegating and too many bad management calls. With his more traditional business background, Terry underestimated the pace of change and intensity of competition when you operate on “internet time,” an environment that magnifies the consequences of good and bad decisions alike. In the blink of an eye a competitor can not only surpass you but gain a shocking lead.

Yahoo got lucky a few times in the past but may have run out of rabbit's feet. The company that turned itself around six years ago was smaller and simpler, as were its competitors. The job market in those days was full of untapped talent after the dotcom downturn. In classical drama a comedy ends in a wedding, while a tragedy ends in death. It’s not clear how Yahoo’s third act will conclude, or whether there’s even much difference.