Many of you have read or at least heard about IAB President and CEO Randall Rothenberg's Manifesto. Published February 9 on the IAB site, this was one of the best-assembled and most thought-provoking industry pieces I have seen in a long time. Perhaps best of all, it's truly a manifesto, a declaration of principles and intentions made manifest by their elucidation.
Too many companies in our space think that their boilerplates have to be called a "mission statement" or a "manifesto," perhaps because they think that makes it sound more important. Anyone who thinks this should head straight to the IAB site -- or perhaps their high school history teacher -- and see what a manifesto really is.
Our industry is much different from others in that it's so powerful and so young, so flush and brash but so dependent on the oldest values, nurtured by the newest technologies. One of the ironies about our industry is that it's probably among the most creative industries -- when regarded from the outside, as an industry. I mean, what we do is darn fun and plenty creative. We're changing how people and companies communicate, after all.
But, as an advertising or marketing segment, interactive has all too often let itself be constrained by a DM or technology mindset, rendering our image as less creative, especially when compared with other advertising segments.
Rothenberg set aside much of the IAB's recently completed annual meeting to engage attendees about the issues constraining creativity in interactive advertising, and the speakers did their best to tackle some of these issues head on -- beginning with IAB Chair Wenda Millard, whose kick-off keynote garnered a lot of industry coverage while sticking to some familiar themes.
I spent some time with Rothenberg during and just after the annual meeting in Orlando to answer some questions catalyzed by the event and examined against the backdrop of his manifesto.
Naples: Wenda's kick-off keynote Sunday night warned attendees of the ills of commoditization. But doesn't commoditization imply context? After all, some of the most expensive commodities rise (like gold) or fall (like platinum) based on external contexts that drive their market. As long as interactive is as difficult as it is to sell and execute, as compared to print, for example, how can exchanges and networks do harm to the industry as a whole? Put another way, what's wrong with the stratification brought about by networks and exchanges? Great campaigns will still be great campaigns and mostly run on the best sites, won't they?
Rothenberg: Commodities are nothing more than traded goods that are subject to natural or artificial standardization -- think oil, coal, pork bellies, 30-second TV spots. And at root, networks and exchanges are just transaction mechanisms, like the commodities exchange or the NASDAQ, designed to bring buyers and sellers together in a way that is -- that should be -- advantageous to both.
The Bain study for the IAB last year suggested that the pure transaction model for networks is itself becoming commoditized -- they're increasingly being seen simply as trading mechanisms for lower-priced ad inventory. In order for networks to move upstream, Bain said they have to become more expert in providing services to marketers, publishers, and agencies.
But this whole debate about commoditization misses some fundamental points. Other industries have seen basic products and services subjected to pricing and commoditization due to increased pace of technology transfer, communications, and financial flows globally, even the movement of the labor pool. Ideas move far more quickly than they have in the past, meaning that customers want more flexibility and choice, and they can demand much more than they have been able to in the past. This is not something that is unique to the interactive business.
Even so, many industries and companies within them still manage to command premium prices and deliver premium value. Think about it: You can take a pork belly and grind it into dog food, or sauté it into haute cuisine. The difference is service. You pay for the surroundings, including the expertise of the chef, the whole kitchen, and maybe even the restaurant décor. That makes the customer willing to pay more and see more value in what they are paying for. The same is true with our business and in any other business.
In our industry, those who prosper will be the companies that get to know their customers better and provide services and an environment that will enable them to move beyond price. Their business has to become about solving their customers' problems. The winners will be the ones who provide the best solutions.
Naples: I applaud the IAB's new advisory board to improve creativity, and I look forward to seeing how it can do just that. If you were to make one recommendation by way of projection to the creative agencies and buyers today, what would it be?
Rothenberg: Our agency advisory board consists of senior execs from a variety of different agencies. Some of these are so-called media agencies, so-called creative agencies, so-called boutiques, and others. I say "so-called" because I think that these distinctions are increasingly meaningless. We wanted people on this board who were creative as business leaders, not just designers. Ideally, the advice we get from these creative business leaders will inform our recommendations.
That said, advertising creativity has been a significant missing link in the past 15 years of our industry. The glory of the interactive medium is about what it can do to elevate people's emotions and intellect in ways no other medium can. So, if we're not talking about how creativity can elevate this for our interactive segment, then were really missing the boat.
The people who founded the IAB did such a great job of creating harmony around processes and standards -- the guidelines and procedures that are vitally important. But, trains need to run on tracks that have two rails. Process and guidelines represent just one rail. The other rail is represented by establishing our industry's hospitality to the craft and practice of persuasion. A big part of what we're trying to do is the laying of that second rail.
Naples: Most marketers recognize that the coolest thing about our medium is its interactivity. Not every brand benefits at the same level from such interactivity with its consumers. But we all know some terrific case studies. Digital's newest segment may be its most interactive yet -- so-called social networks, or UGC. With all the problems associated with monetizing social networks, what do you see as their future for marketers? Do social networks have a meaningful future for marketers?
Rothenberg: It's important not to lose sight of the bigger picture. Social media has always been part of the web and has only become a big subject for marketers for the past three years or so. It's far too soon to project what the ultimate shape will be. Already, the effects of social media and marketing are profound. I recommend that people take a look at the recent Booz & Co. research on our website. The IAB did this research in conjunction with 4A's and the ANA. Social media/social marketing come up on every page. Marketers are profoundly interested in how to engage in dialogue with their consumers.
These marketers aren't necessarily asking, "How do I advertise better on social media?" They are asking, "How do I better utilize the dialogue abilities and interactivity to help grow my business?" Maybe this means advertising -- maybe not. Maybe it means gleaning more and better consumer insights or processes to improve the supply chain. Maybe it means learning some advances in crisis management.
Having said all that, it seems inconceivable to me that when you begin inventing individual sites and channels like LinkedIn, MySpace, or Facebook that have such vast audiences and such deep engagement across hundreds of millions of households, that you won't also have ad models follow. It defies credulity to assert that they won't be useful for basic advertising. Their utility and reach alone would seem to dictate that.
Naples: The data wars seem to be heating up again, and all of the sudden we're hearing the same nonsense we heard back in 2001. Why does our industry have such a hard time explaining privacy matters to its constituents? And do you see the IAB taking on a more activist role in explaining, if not mollifying what is, essentially, an issue in online privacy (cookies, et al.) that implies far less risk than every time a consumer uses his or her credit card at the grocery store?
Rothenberg: People have been scrambling to stay up with the fantastic speed of this business. I wasn't involved back then, but I've been struck, in reviewing the past, that issues relating to consumer protection and data ownership did not historically seem to engage company leaders. They left it to their sales leaders or their public affairs folks in Washington.
When DoubleClick announced the purchase of Abacus back in 1999-2000, that started the serious controversy and it reached Washington. People within our industry did the right thing by starting a self-regulatory program, the NAI. But then the regulatory debate sort of went underground. It's almost as though people thought it was over. It should not have been left that way. Business leaders need to be involved; they need to understand that they must love their consumers. Consumer privacy protection cannot be an afterthought -- it's an opportunity to get closer to consumers by being completely transparent with them.
In mid-January, the IAB formed a self-regulatory commission after 18 months of behind-the scenes work with DMA, 4A's, the ANA, the Better Business Bureau, and others. This cross-industry self-regulatory initiative represents the first time the entire marketing-media ecosystem has come together to develop practices in interactive advertising.
That actually was part of an incredibly eventful and productive year. In addition to the self-regulatory group, which is fundamentally important to the industry, we've also had success in taking cost and complexity out of the supply chain. We now have a set of solutions and business process standards that we believe will eliminate ad serving discrepancies within two years.
Discrepancies could range up to 50 percent of a given buy, and have been costing the industry millions of dollars over the years. But, our research showed that these were more about human error -- and not about technology. Getting agencies and publishers to agree on Terms and Conditions, the standardization of I/Os and invoicing, and providing a technological means for every agency to have daily visibility into their campaign discrepancies will become part of every campaign flight very soon. This will have an immediate and material impact -- one that could save some companies tens of millions of dollars.
Summary
My conversation with Rothenberg demonstrated to me that while the IAB has published numerous white papers on UGC/social media, digital video, search, and many other segments of the interactive industry, that's just part of what this trade association is doing to promote the industry. With digital still in its infancy, the IAB is also crafting solutions that can save the industry -- and its practitioners -- a lot of money. It's worth keeping an eye on. I'm probably more aware of this sort of thing than most of you are, dear readers, and I sure learned a lot from the time spent on the IAB site after my conversation with Rothenberg. Chances are that you probably would, too.
Mark Naples is managing partner for WIT Strategy.