Thursday, November 08, 2007

Bringing down the house of Reiman. . . one "ripple" at a time

Bringing down the house of Reiman. . . one "ripple" at a time
by Samir Husni

In the age of mergers and acquisitions, promises are rarely kept and previous owners/founders usually live to see the day that their babies lose their DNA and the original parents end up disowning the products emotionally after they have disowned them financially.

Reader's Digest Association is a good example. RDA bought Reiman Publications (Country, Taste of Home, etc.) in 2002. (RDA paid $760 million for Reiman Publications; click here to order the book that tells the whole story of the sale, the history of Reiman's "no ad" approach and more.)

The changes in the company started from that point on, with redesigns and repositioning of several of the titles. That was attempted to force growth, but it didn't work. Then Ripplewood Holdings bought RDA, taking over in early 2007, and began accelerating the changes even more.

Now, according to sources knowledgeable with what Ripplewood is doing, the process of de-branding of Reiman Publications has started. . . and started big time.

The Milwaukee Journal Sentinel reported on June 19 that Ripplewood renamed Reiman Publications. It's now RDA Milwaukee. "Reiman as an entity is going to go away," company President Barbara Newton told the paper shortly before she lost her job.

According to my sources the RDA release reflected the fact that "Reiman is not a known brand. The brand is in the magazine names."

So how is Ripplewood changing the Reiman brand? Well let me count the ways:

1. No leadership in Greendale, home of Reiman Publications:
Ripplewood terminated Barb Newton, Reiman Publications president, after deciding they don't need a President in Greendale anymore, that they can run the whole thing from New York! So they now have nearly 500 people nearly a thousand miles away without a direct "leader". However, RDA spokesman William Alder told the Journal Sentinel that this change represents "a re-upping of the commitment to work with the folks there (in Greendale)."

2. The end of the "No Advertising" model:

Reiman Publications created one of the most successful magazine publishing models ever-one that was strictly dependent on circulation revenues. When RDA bought it, the company was extremely profitable. It published 13 national titles reaching more than 16 million paid subscribers. . . without a single advertisement.

Now, Ripplewood has decided to remove that unique aspect; it has started carrying advertising. The first ad brought in $60,000 for the Select Comfort Bed ad that's included in the current issue of five of the company's magazines-Country, Birds & Blooms, Backyard Living, Reminisce and Farm & Ranch Living.

One of my sources feels that $60,000 ad will cost the company more than $6 million in renewals. Why? Because the no-ad approach was-more than anything else-the one thing that made the magazines "different".

It was by far the magazines' most talked-about element over the years. Now, with the removal of that unique element, this source believes renewals will drop off so fast that what started out as a Ripple will end up being a title wave!

Amazingly, the Ripplewood folks don't feel the "no advertising" approach is essential to their success. In fact, their reaction to this unique approach of publishing is "utter disbelief that Reiman Publications has had this huge circulation and hasn't bothered to sell advertising up till now," a reliable source told me.

3. Readers are no longer the number one customer:
According to my sources, the Reiman Publications' empire that was built on reader input is now heading toward a complete U-turn. In fact, an internal e-mail from one of the RDA managers last winter stated, "I don't care what the reader wants. . . this is what I want!"

That's not far from reflecting the current feeling at Ripplewood. One of its managers recently stated, "We need to turn over this circulation base anyway; we need to attract a much younger, more vibrant audience."

In short, "the magazines just haven't been the same for more than a year. And now with the inclusion of ads, they're really not going to be the same," my source said.

Am I surprised? NO. Why not? Well, the top 14 people who were in charge of Reiman Publications are no longer employed at Reader's Digest Association. So, since most of these top people have been replaced by RDA's chosen people. . . didn't RDA pay all that money to buy themselves?

A final thought, a wise person summed for me this whole process of mergers and acquisitions as follows:

"The bottom line is this: Small companies do things that benefit the customer. Corporations do things that benefit the stockholders. Small companies think long-term. Corporations think short-term, as in quarterly reports. Small companies really get to KNOW their customers to sustain growth. Corporations aren't much interested in getting to know the customers and concentrate on maintaining growth through what they learned works for other audiences."

Wednesday, November 07, 2007

BoSacks Readers Speak Out: On Postal Reform, Maghound, Time Inc, Hearst

BoSacks Readers Speak Out: On Postal Reform, Maghound, Time Inc, Hearst

Re: Postal Reform: The Good, The Bad, The Ugly
There is much to digest in this piece about mailing rates and how the new structure is likely to affect magazines. That will take time. There was however, one bit of indigestible gristle to be spit out post haste: "post-master general Jack Potter has said, 'I don't want to hear from self-serving printers.'"

Imagine the nerve of printers, acting in a self-serving manner and thinking of their businesses! Just because they produce the products that provide work to USPS employees, do they think they have something useful to say about how the system works? Imagine! Just because their businesses provide work for tens of thousands of Americans, and add to the general prosperity do they think their selfish desire for profits should mean something to such an elevated personage as the (cue the music)...Postmaster General, Jack Potter? The USPS doesn't know the meaning of the word profit and they are proud to say so. Do these printers think that the taxes paid by them, by their stockholders, and by the people whose livelihood their printing businesses provide gives them some kind of voice just because those taxes subsidize the USPS? Why, the unmitigated gall!

If we let these self serving printers have a say in how the USPS functions, if that's the word, who knows where it will end? First, customers will think they should have a say about how real businesses work. Then voters will expect the government to respond to their wishes, and we all know where that could lead!

I say thank goodness we have self sacrificing, superior, public servants like (cue the music again)...Post Master General, Jack Potter "running" the USPS with its well known and universally admired standard of world class efficiency telling us who gets to have an opinion. I'm sure those printers who have managed to survive and prosper in the challenging market of recent times could learn a few things from him and his stellar operation, if only they didn't place so much self serving value on their continued survival. The nerve of some people.
(Submitted by a Printer)

RE: Time Inc. Maghound: a Netflix for Magazines?
The main problem I see with this is that, in the name of serving readers, you can actually undermine them in the long run. To not just barely succeed, but thrive, you have to give customers not only what they want, but what they didn't know they wanted. In the middle of letting them choose this and that, why not the occasional short blurb saying, "Given what we've seen of what interests you, we think this is an article you'd find interesting. We know it's not what you might normally pick, but here are the reasons we think you might find it really interesting. Because we value you as a customer, we're making this particular piece freely available to you. Hope you like it, and let us know with the check-off buttons at the end whether we were right or wrong." This would be like high end restaurants offering free tastes or little treats available to regular customers. The technology exists to do this, the content exists to do this, so why not just do it? Build a relation and show how you can help direct people to what they'll find important. It would get around the potential Balkanization of news and eventually strengthen the relationship between publisher and reader.
(Submitted by a Writer)

Re: Wal-Mart to sell books, magazines at U.S. list prices
How generous of WMT to sell books and cards at U.S. prices now that the Canadian$ is at about parity with US$. Maybe they will instruct their domestic cashiers to no longer toss Canadian nickels back to customers.
(Submitted by a Publisher)

Re: Do We Spend Much Time Reading Publications?
anybody who wastes forty minutes a day reading the Mulwaukee Journal cannot read very fast.
(Submitted by a Paper Person)

Re: Going Postal: Arguing for Media Diversity, Debate & Democracy
The business side of me says the USPS is doing the right thing by making
postage more closely match actual costs. Just think if the rest of government functioned even half this efficient!

However the ideology of this argument is compelling. Of course the USPS has
come along way since the only way to get political news was via post and is
worthy of thoughtful discussion.
(Submitted by a Printer)

RE: B-to-b magazine revenue, ad pages down through July
Hi, I'm Rose Glasses from the MPA
Ad pages in business publications fell by almost 3% through July, according to ABM.
But the great news is that MPA research shows that magazine readers are big users of the Internet! They also use pencils and pens and telephones! And most of them still have a pulse.
(Submitted by a Printer)

RE: BoSacks Speaks Out: The Seybold Report
Bo: Great interview.....your message, as always, is right on the mark.
(Submitted by a Director of Mfg and Distribution)

RE: BoSacks Speaks Out: The Seybold Report
Bob, best damn interview I have read in years. Now I am really sorry that I missed your public conversation with Samir in Florida. This was a fascinating take on our future as an industry.
(Submitted by a Publisher)

RE: BoSacks Speaks Out: This is Very Important
Bob, You are absolutely right, It's all about the content.
We need to figure out how to deliver the content in any manner the customer wants it.
As a production person who is in the middle of self re-invention, I can tell you it's a tough world out there.
What I don't want is for you to sugar coat it. I need the truth straight up so I can make good sound decisions on what direction I pursue.
(Submitted by a Production Director)

RE: BoSacks Speaks Out: This is Very Important
Want alleviate some of the pessimisim? Stop referring to magzines "dead trees". It's the Bambi Syndrome I can only imagine the heartbreak of those little orphan trees growing up and branching out on thier own.
(Submitted by a Printer)

Re: Magazine Publishers go Mobile for Readers
Oh, great! Now I have to worry about being rear ended by the Soccer Mom in the Escalade SUV not because she is getting a call from her kids, but surfing the InStyle web site on her cell phone. This is nuts!
(Submitted by a Senior Director of Mfg and Dst)

Re: Magazine Publishers go Mobile for Readers
I seem to be on a tear today. Call me a skeptic, but how do the media companies *know* that customers really want to read magazine articles on their cell phones? Have they actually talked to large enough numbers of customers to get a statistically projected conclusion? Or are they simply relying on the reports and claims of consultants and vendors of products and services who all make money in various ways when media firms spend on mobile content delivery?
(Submitted by a Writer)

RE: View from the Top: Cathie Black, president, Hearst Magazines
Every time I see something from some media bigwig, I'm surprised at the attitude. It's almost always about "what and how are we going to do," and almost never about what customers need. You can't have success ignoring the needs and desires of your customers - whether readers or advertisers. Why is there so little interest, other than as a curious milk cow, in the very people the business exists to satisfy? Could it be that such a view makes the movers and shakers less important?
(Submitted by a Photographer)

Google Unveils Mobile Vision; An Open Platform Named Android

BoSacks Speaks Out: I don't have the stats here with me, but the ratio of mobile phones to computers is something like 4 to1. There are 4 mobile phones for every computer. Please read this article and hold that stat in your head.

"There are two kinds of statistics: the kind you look up and the kind you make up"
Rex Stout (English Writer, 1886-1975)

Google Unveils Mobile Vision; An Open Platform Named Android
by Mark Walsh

HOPING TO SPUR THE GROWTH of the mobile industry as it did the Internet, Google on Monday announced the launch of a new mobile software platform aimed at opening up and simplifying the creation of applications and services for the cell phone.
As part of the initiative, Google has forged a broad alliance with more than 30 mobile operators and handset manufacturers including Sprint, T-Mobile and Motorola to build new devices and technologies that run on Google's Android mobile platform. Noticeably absent from the newly formed Open Handset Alliance were major wireless players including Verizon Wireless, AT&T and Apple.

The first phones using the new open platform that promises a more Internet-like mobile experience won't come out until the second half of 2008. But Google will begin releasing software development tools for Android to programmers next week.

"Today's announcement is more ambitious than any single 'Google Phone' that the press has been speculating about over the last few weeks," said Eric Schmidt, Google's chairman and CEO. "Our vision is that the powerful platform we're unveiling will power thousands of different phone models."

Schmidt emphasized during a conference call Monday with other alliance members that Google was not announcing the launch of its own mobile device at this point. Rather, the company is providing an open mobile system for handset makers and developers to create new technologies around.

"The fundamental problem that most phones people have today is that they don't have fully powered Web browsers," explained Schmidt, noting that Google so far has to create specially tailored versions of popular applications like search and gmail for mobile devices. Android will encompass a browser that delivers an end-user experience more similar to surfing the PC-based Internet.

Beyond browsing, Google and its partners also envision the new platform powering the development of more advanced Web 2.0-styled applications in areas such as online audio and video, gaming and social networking. "The Android platform, in our view, will be the first to enable those [mobile] applications on a large scale," says Schmidt.

In a similar vein, Google recently led a coalition behind the launch of OpenSocial, an open platform for developing social networking applications. Schmidt acknowledged that OpenSocial would be a good fit with the new mobile platform.

Google and others have complained that for too long wireless operators and manufacturers have maintained their networks as walled gardens, making it difficult to establish industrywide standards and costly for developers to create applications for a variety of different phones.

Through its mobile initiative, Google aims to break down those traditional industry barriers by reducing development costs and standardizing platforms.

Now many of the wireless companies that have viewed Google as a potential threat are seeking to find a balance between competing and working with the search giant.

"We see the Android platform as an exciting opportunity to launch robust wireless Internet and Web 2.0 services for T-Mobile customers in the U.S. and Europe in 2008," said Rene Obermann, chief executive of Deutsche Telekom, parent company of T-Mobile, which has already partnered with Google in Europe.

Bill Huang--general manager of China Mobile Research Institute, the research arm of China Mobile--said during the conference call that the company would use Android to extend more choices to its 340 million customers. "An open platform is the key to delivering the best mobile applications and Internet experience," he said.

When it came to new business models emerging from the alliance, however, Google and mobile executives were more tight-lipped. Schmidt foresees ad revenue-sharing deals developing between Google and wireless companies.

"We're likely to want to enter into such agreements with handset partners because sharing ad revenues produces a better overall ecosystem," he said. "I think it's highly likely we could do it."

Deutsche Telekom's Obermann agreed on sharing ad revenue, but said the alliance would not change its basic subscriber business model. "Who pays for what will remain in place," he said. Exactly how far T-Mobile and other companies are willing to open their offerings under the new partnership remains to be seen.

Verizon Wireless and AT&T, which haven't joined the Open Handset Alliance, have previously been hesitant to add Google apps to their service menus. AT&T also powers Apple's iPhone. Apple, which also isn't on board with Google, recently said it would begin opening the iPhone platform to third-party developers.

Google watchers have speculated for months about the company's plans for expanding into the mobile industry. Rumors surfaced earlier this year that the search giant might come out with its own Google phone to take on Apple's iPhone and devices from other manufacturers such as Motorola and Samsung.

Anticipation was heightened in July when Google said it might bid in the upcoming 700Mhz spectrum auction, and pushed the Federal Communications Commission to adopt open access rules that would allow any mobile application to run on any device or network within the 700 band.

On Monday, Schmidt said that its potential participation in the wireless auction and its launch of Android were unrelated. "Android will run well on all of the existing data networks," he said.

More recently, Google had reportedly been in talks with Sprint, Verizon Wireless and Vodaphone about adding its services to their phones. Sprint had announced in August that it would provide Google Search to subscribers using a new network it's building based on Wi-Max, an emerging mobile broadband technology.

Mark Walsh can be reached at

Reality check

BoSacks Speaks Out:

I've become a big fan of Alan Mutter over the year or so. He writes with great insight. But the stats he presents in this article are, well I'm just not sure what they are nor how to digest them. But I know that I spend about an hour or more each morning on-line reading at least two newspapers. So the statement and charts included here are just unfathomable to me. What do you make of this data? Can this really be correct?

"I told him this league is about winning and losing. It doesn't matter what your stats are, as long as you're the quarterback on a winning team you're going to be a star."
Lawyer Milloy

Reality check
by Alan Mutter
Newspaper publishers congratulating themselves for meager gains in their online audience ought to take a look at the competition to see how far behind they really are.

The average time spent at the 10 most active newspaper websites between March and August was 12 minutes per month, according to the Newspaper Association of America.

By comparison, the average time spent in September on sites operated by the 10 largest online companies was 1 hour, 14 minutes and 40 seconds, according to Nielsen/NetRatings, the same agency providing online traffic data to the NAA.

In other words, the average visitor spent 24 seconds per day in a 30-day month on a newspaper web site, as compared with an average of nearly 2½ minutes per day on the 10 sites operated by the web leaders.

Thus, surfers spent 6.2x more time on sites operated by the likes of Google, Microsoft or Yahoo than they did on the sites of such papers as the New York Times, Washington Post and USA Today. (The full comparison of the Top Ten sites in each category is shown below.)

The statistics for Google aggregate traffic for its eponymous search engine, YouTube, the Orkut social site, Google maps, Gmail and much more. Yahoo's traffic includes the portal itself, as well as such kin as Flickr, Hot Jobs and the like. Ditto, for Microsoft and the others.

While it stands to reason that the multiple online venues operated by the web giants are bound to attract more traffic than the one-trick-pony sites operated by even our biggest and most prestigious newspapers, it is important for publishers to get real about the breadth and depth of the true competition for eyeballs and advertiser dollars

Newspapers are not gaining in absolute online traffic any more than they are not gaining in print circulation. In but one example, the New York Times website, which ranked among the 50 most popular sites as recently as 2003, today ranks No. 219 on Alexa.Com.

Happy-talk press releases, which won't fool even the dullest media buyer, are dangerous in two ways. First, they detract from the already weakened credibility of the industry. Second, they convey a false sense of progress to publishers, editors and ad sales people who ought to be scared as hell about the future of their industry.

How can anyone take pride in the fact that the average visit at the San Francisco Chronicle website - which serves one of the most technologically sophisticated markets in the world - is a mere 10 seconds per day?

Tuesday, November 06, 2007

Publishers Eye Ways to Hire, Retain Talent

Publishers Eye Ways to Hire, Retain Talent
by Lucia Moses

Magazine publishers have heard it all before, and speakers at the American Magazine Conference last week only reinforced it: They are behind on integrated marketing, they need to catch up to consumers' online habits and their Web sites are dwarfed online by the big foots of the digital world.

Yet at the same time, magazine companies need to up their game online or risk failing to attract or keep the talent they need to do so.

Whether they left on their own or were pushed, a handful of prominent executives have exited the industry this year. One of them, magazine vet Joe Lagani, just last month left Condé Nast's House & Garden, where he was vp, publisher, to join Glam Media, a collection of lifestyle and fashion Web sites.

Lagani, who became vp, general manager of Glam's new living channel, GlamLiving, said he was attracted to the site's business model and growth prospects. And while careful to stress he's not a basher of print (he's married to Cosmopolitan senior vp, publisher Donna Lagani), Lagani said magazines need to demonstrate they are places where creativity and innovation can flourish.

"There's a large gap in time consumers are spending online and the amount advertisers are spending online," Lagani said. "So the digital space shows a lot of opportunity for people who understand that. And folks who have an entrepreneurial spirit are going there. The digital space is a place where people who want to work in a growth industry that's extremely creative and very fast-moving will want to go."

The digital world has nabbed other print veterans recently, including former Dennis Publishing U.S. head Stephen Colvin, who last week joined CNET Networks as executive vp; Tim Castelli, who bolted from Rolling Stone, where he was publisher, to become director of New York ad sales for Google; and Geoff Dodge, who stepped down as BusinessWeek senior vp, publisher to become senior vp at CRM firm
Colvin said that while he had offers to stay in magazines, "It's exciting to be moving to a new platform. I think if I'd stayed, it would have felt pretty similar."

Of course, the movement can go the other way. In June, Wenda Harris Millard left Yahoo for Martha Stewart Living Omnimedia to grow cross-platform sales; last week she brought over a Yahoo sales exec, Jacki Kelley, to help in that effort.

At Time Inc., the brain drain has been ongoing as a result of reorganizations and streamlining. In 2005, CEO Ann Moore cut loose 105 employees, including several high-level executives. Those who left in that exodus included Jack Haire (who was picked up by CNET as a special advisor and is now chief client officer), executive vp Richard Atkinson and Time Group president Eileen Naughton. This year, longtime execs leaving Time Inc. included Nora McAniff, co-chief operating officer and a 25-year vet; Robin Domeniconi, president of the Time Inc. Media Group, with seven years at the company; and Mike Dukmejian, group publisher, with 27 years in. Most recently, 30-year vet Mike Klingensmith said he plans to retire from his executive vp post in the beginning of '08.

Naughton, now director of media platforms at Google, had some tough words for her former industry. Delivering a keynote at the AMC, she nudged magazine execs to grow their presence online by making their content easily found and freely available. Offstage, she offered a harsh outlook for magazines, contrasting them unfavorably to the optimistic and refreshing online world. "Why would young people go there?" she asked.

Publishing execs acknowledge concerns about attracting and keeping top talent aren't far off, if they don't face them already.

"We're stereotyped as old media, despite all the things that are going on online," said John Griffin, president, National Geographic Society magazine group and newly elected chairman of the Magazine Publishers of America. "The younger generation doesn't see it as an exciting place to work."

He wouldn't get much argument from his MPA predecessor, Jack Kliger, president and CEO, Hachette Filipacchi Media. "It's not as glamorous as it used to be on the magazine side," Kliger said. While the expectations for lucrative pay on the digital side has created a "gold rush" for online advertising job-seekers, Kliger said the hiring pool of print ad salespeople isn't what it used to be. "There used to be 15 people for a job. Now, it's five."

Magazine vets also say the industry has done a poor job of enabling the cross-training needed to develop well-rounded leaders. Some accused companies of foot-dragging in their response to consumers' and advertisers' evolving media habits and needs.

Colvin said he believes publishers could address that problem by giving employees more exposure to a variety of functions.

Some publishing executives said they're trying to do more to make their companies attractive to current and would-be leaders. Meredith Corp. in recent years has bought several marketing companies like New Media Strategies, an online word-of-mouth firm, and Genex, an online CRM company. Those deals have enabled publishers to boost their cross-selling abilities, said publishing group president Jack Griffin, because "they feel like they're part of the future." At the same time, he's kicked up the amount of cross-training for print and online sellers and training for edit employees. He believes these efforts are reasons Meredith has had relatively low turnover in the executive suite.

At Hachette, the focus is on training and compensating salespeople to motivate them to sell cross-platform advertising packages, Kliger said. Still, the question for the industry nags at him: "Where are you going to find in the next 10, 15 years the next generation of sales talent in the business?"

Marketers Want Media Ideas, Not Protectionism From Agencies

Marketers Want Media Ideas, Not Protectionism From Agencies
No Longer Is It About Hitting Certain Numbers but in Showing Measurable Change in Consumer Attitudes
By Jonah Bloom

What do Meredith's Matt Petersen, Time Warner's John Partilla, Condé Nast's Richard Beckman and Hearst's Jeff Hammill have in common? They're smart. They're likable (yes, even "Mad Dog" Beckman, whom Gawker once saddled as one of New York's "worst bosses"). And, until recently, it seemed they were tilting at windmills.

They are just four of the more-senior media execs whose job, essentially, is to sell marketers into idea- or consumer-driven programs that make use of a bunch of their companies' different brands, platforms and marketing disciplines. Sounds feasible on the face of it, until you start considering the internal politicking skills ("bribery, blackmail and brute force," as one corporate-sales exec put it) needed to persuade publishers of individual mags, sites or TV channels to co-operate in these endeavors.

More problematic for our creative corporate-sales warriors are the ranks of agency troops massed against them. Firstly, the agencies, as the people jealously guarding their clients' marketing money, have to be constantly reassured that they aren't being circumvented. (They often are, of course.) Secondly, the agencies are only too ready, given the chance, to put the kibosh on some media owner's idea that a client has asked the agency to take a look at or work on. (Twice recently I have heard the details of strategically sound, well-targeted campaigns that have been wrestled to the budget cutting-room floor.)

Media agencies, in particular, have been an impediment to the creative sales folk. Their medium-by-medium departmental buying structures have made it difficult to get a green light for a cross-media project. More-junior agency planners and buyers have tended to be working against some pretty basic metrics -- reach and frequency -- that make programs that aim to achieve a level of engagement or certain behavioral changes of limited interest to them.

But all that is changing.

At least a half-dozen times in the past few weeks, I talked to big-budget marketers who were both desperate and determined to get a better map to today's media landscape and to find better, more innovative ways of working in it. Their one-time obsession with hitting certain numbers has given way to a healthier obsession with showing measurable changes in consumer attitudes or behavior.

They have their reach vehicles, and there are a handful of truly mass-media operators out there that will be a part of what some marketing categories do for many years to come. This will likely include some of the biggest TV players, certainly the major web aggregators such as Google, Yahoo and Microsoft, maybe one or two outdoor operators, a handful of the most broadly distributed print titles. But reach will figure less prominently for magazine and web publishers and smaller cable operators. For them, the relationships with their audiences will be the key.

What's more, marketers have told their media agencies what they want and are getting it. As J&J's Brian Perkins said at last week's American Magazine Conference, he wants to hear ideas from the media owners, and he trusts the likes of Partilla to bring them to him. Some agencies have moved to construct cross-media buying units. And those agencies that stand in the way of a marketer wanting to get closer to the media had better watch out. Perkins has moved his media people to New York so they'll be accessible to media owners, and several of the automakers are considering similar moves.

The days when media owners could rely on selling off-the-shelf packages are numbered. So, too, are the days of media agencies being able to treat them as if that's all they do.

The Era of Bottom-Up Brands

The Era of Bottom-Up Brands
Google's Dominance Is Changing the Rules
By Which Brands Win Consumer Loyalty

One of my favorite stories in the history of Web business -- a chronicle by turns heroic and tragic, ambitious and doomed, shrewd and really, really dumb -- is that of Pathfinder, Time Warner's attempt to dominate the Web by building a common home for its various print titles.

Pathfinder began in late 1994, when the Internet was still largely the domain of scientists and academics, and as such was a bold effort. But by the time it was shuttered in 1999, it cost Time Warner some $75 million on paper and immeasurably more in opportunities lost while charging in the wrong direction. (It lives on here as a rather sheepish billboard for Time Warner properties -- I probably would have guessed that Coastal Living is "the Web site for people who love the coast." For a look at what used to be, check out the Pathfinder Museum.)

"The Pathfinder Way" should be shorthand for a particular flavor of brand confusion -- namely, that people know what corporation has the rights to a particular magazine, book, song, TV show or movie. Imagining that they do, or thinking they can be taught to do so, still trips up record labels, publishers and other content companies who only listen to voices inside their own building. But not to the extent it did during Pathfinder's heyday, when Time Warner media properties fought with the parent company for the right to establish Web sites branded with their own names.

The idea is obviously crazy now, but don't give Time Warner a break based on hindsight -- it was crazy then, too. You never needed a Web futurist to see that Time Warner's individual brands were better off on their own than subsumed under a corporate umbrella site with its own newly created brand. (If you'd like to continue down bad idea memory lane, here's what remains of Walt Disney's Go site, a halfhearted Pathfinder whose other legacy is extraneous characters added to Web addresses for Disney properties such as ESPN and ABC.)

It's fun to mock Pathfinder, and companies forget its lesson at their peril. But it's also easy to forget how different the Web was before Google arrived. In the early days, any good Web site about anything was of at least passing interest -- hence Cool Site of the Day, now a somewhat random portal. By giving people a reliable way to actually find what they were looking for, Google changed everything. And those changes haven't stopped coming.

A decade after registering its domain name, Google's name has become a verb for the service it offers. Seven years after it started to sell ads based on those searches, it's on track to top $15 billion in revenue for 2007. Riding on those big coattails is the industry of search-engine optimization, which has gone from an oddball curiosity for small businesses to something no organization with a Web presence can afford to ignore.

On today's Web, everything begins with Google -- and that's driving a sea change in how brands are built and succeed. While brands remain vital online, the old top-down model of building them (think of a new magazine launch) is increasingly irrelevant to the Web. Instead, Google's dominance allows and even encourages brands to be built from the bottom up, with their overall identity far less important than the little slices of themselves returned by Web searches and their position in search rankings.

These bottom-up brands already exist, and here's an easy way to identify them: You're more familiar with individual slices of their content than you are with their home pages -- some of which you may never have visited.


Has Google's dominance changed how you use the Web? How do you think branding is changing in a search-first online world? Join the ongoing discussion in the Real Time forum.There's, a compilation of how-to guides you've undoubtedly used or at least encountered. There's YouTube, now part of the Google empire. And there's Wikipedia. If you've ever entered a given term and "wikipedia" in Google to bring the Wikipedia page to the top of your search results, you've summarized bottom-up branding rather succinctly. Odds are you became aware of these sites not because of some big marketing campaign, but by repeatedly encountering bits and pieces of them through search engines -- until you began to think of them as entities in their own right.

And more such brands are arriving every day.

At first acquaintance Hulu, the online-video venture between NBC Universal and Fox -- whose parent company has agreed to acquire the Online Journal's publisher -- feels like a whizzier version of the Pathfinder Way: It assumes consumers know what network a show is on and dresses that inside-the-building conceit up with a new brand name.

Ten years ago, that approach would probably have been fatal, and it still might be. But today it's far less important than how high Hulu's videos will appear in search rankings. (Hulu's distribution deals also help, though in that case bits of content are being pushed to consumers through various outlets, rather then pulled by them through search.) This raises the possibility that the Pathfinder Way may live on for years as a full-employment act for old-style brand marketers, who will soldier on without ever having to confront their own irrelevance.

A different example is presented by Associated Content, which recruits people to write about a huge number of specific subjects in hopes of attracting Web users performing searchers -- and by doing so, creating an inventory of interest to advertisers and content companies looking to supplement their offerings. (For a good portrait of the company, including the debate over its model and the presence of Google's Tim Armstrong on the board, see this July portrait by's Elinor Mills.)

From its model to its no-frills name, Associated Content can sound utilitarian, particularly to veteran writers like me. But the company contends that many people performing a specific search will value specific information more than fancy wordplay: If you're going to Venice in August with kids, Joe Friday's workaday account of visiting Venice in August with kids may prove a lot more useful than a John Berendt travelogue. (Not to mention that it's snobbish to assume Joe Friday's account is workaday.)

As you'd expect, search is a significant part of Associated Content's strategy. But right now brand isn't, and that's because of how search has evolved. As with About, Wikipedia and YouTube, visitors to Associated Content are likely to arrive through search results instead of by calling up the home page -- entering through the side door instead of the front, if you will.

Asked why Associated Content even has a home page (it's here), CEO Geoff Reiss -- a veteran of Spy and ESPN -- confesses that "for a while I was toying with a home page that would just be a search box." He says the company does need a front door for everything from recruiting writers to giving potential partners a place to visit, but acknowledges that at this point "I don't think it's fundamental to our success."

And that may not be a bad thing, considering how many home pages have to serve as the point of entry for every part of their Web sites -- a single-entry strategy that Mr. Reiss sees as increasingly out of sync with how consumers want to use those sites. "If you look at the home pages on Web 1.0 sites, you can hear them groan under the pressure they're under," he says.

But wait! About and Wikipedia and YouTube are strong brands -- Google paid $1.7 billion for YouTube, after all. But rather than building on big, top-down marketing pushes, those sites evolved into strong brands by being repeatedly found through search and gradually creating customer awareness and loyalty. That's the new way of the online world, and the lead Associated Content hopes to follow.

"We have achieved critical mass without having to predicate the business on building a brand," Mr. Reiss says, adding: "We're of the mind that hundreds of thousands of positive experiences can define a brand better than just sticking a flag on top of a hill and saying, 'This is the brand.' "

Monday, November 05, 2007

Google: Master Of Digital Universe

Google: Master Of Digital Universe
by Diane Mermigas

Anyone who thinks Google has missed the social networking boat does not know Google.
Google is in the sweet spot of social networking: personalized data that can be lucratively cross-matched to other users, advertisers and businesses. It has the consummate search and personalization mechanisms, which it seeks to apply to the ultimate social device: the mobile phone.

Its so-called GPhone plan is not an entry into mobile phone hardware or service, but a move to put Google's technology in the hands of consumers, whose infatuation with interactivity and the cell phone is inseparable. Putting Google everywhere cannot help but have social networking and commerce implications. The real driver behind Google's interest in social networking is its lust for the biggest piece of the global ad pie. Social networking is a means to a very profitable end.

Google's search capabilities, maps and navigation, Gmail, reader and YouTube video sharing-as well as auction-based advertising and transaction mechanisms-have deep, compelling applications for mobile phones. They will make mobile phones, the world's dominant digital device, a more vibrant Internet access point to rival PCs. It is all part of the social networking infrastructure (codename: Maka-Maka) Google is building across all of its popular applications.

The dynamic multiservice Google platform could become the consummate global social network, cutting across all demographics. The value of Google's social network will be monetizing users sharing personalized communications, data, entertainment, maps, retail links and transactions. Google will seek to reach beyond chat to provide its interactive search and commerce on digital mobile devices. Achieving that in the next year would put Google ahead of MySpace (owned by News Corp.) and Facebook (backed by Microsoft), which are just beginning to develop their own ad networks into their social network infrastructure.

A key development in this social-networking revolution is expected today, when Google officially invites outside developers into its doors (not only its tepid social networking platform, Orkut)-and potentially thousands of niche players, such as LinkedIn, Friendster and Bebo via the OpenSocial alliance, which seeks to create universal software standards. The consortium will provide a unified rival (in reach and substance) to Facebook, while giving software developers access to the operating systems that interface with mobile phone hardware. That collaborative approach to creating new value has been at the heart of Google's innovation-and more recently, embraced by Facebook, MySpace, Yahoo and other major players. The only downside, and potential risk, is potential abuse of personal user information, as privacy concerns take a backseat to open access creativity.

Verizon, Sprint and other phone-service providers, as well as handset manufacturers, will benefit tremendously from association with a Google mobile phone service and software package, which is expected to be unveiled in two weeks and go to market early in 2008.

The impact would not be unlike the boost to sales and earnings Apple's iPhone has provided to AT&T. Still, wireless carriers are reluctant to loosen the stranglehold they have had on the mobile phone industry, allowing them to charge for services at every level and control the retail distribution of phones. Before any of these new catalysts come into play, social networking is on its way to becoming a $10 billion business. Analysts expect it to grab the majority of marketing dollars spent in all media within the next five years.

However, Google is not just relying on third parties for mobile market access; it is prepared to bet on and win 700-MHz spectrum in an upcoming auction. Google CEO Eric Schmidt, a director of Apple's board and a professed iPhone user, reserves comment on the GPhone, except to advocate for "multiple choices at the mobile platform level."
"The outcome is a platform upon which these new applications can be used in a mobile context, and to us, that is the holy grail," Schmidt recently told analysts. What he means is that Google is willing to open its platform to developers in exchange for creating new ways to generate advertising and transaction revenues from mobile phones and other similar devices that would rival the $49 billion spent annually on TV commercials. Gphone-like its pending DoubleClick acquisition and its new advertising Gadgets and widgets-are key components of Google's strategy to morph into the world's largest ad platform, eclipsing all other forms of media in the process.

Google's success at engaging and tapping into the needs of empowered consumers makes early analyst projections appear conservative. At least $1 billion of Google's estimated $27 billion in annual revenues by 2010 will be generated by the mobile phone market. There will be no limits to what Google reaps from commerce and transaction-based search mobile services, since the company is not bound to traditional definitions of advertising and commerce.

For Google, it's all about connecting with the targeted consumer to make a pitch that will be virally shared with countless friends, result in a transaction, and establish an entrenched long-term relationship. And Google is paid a share of something every step of the way. (This same concept is what is spurring the recent "instant getification" social networking trends at and eBay.)

Google's ability to create value and seize control of reinvented markets has been at the very heart of its more than 700%-plus growth from a $4.8 billion to a $220 billion company since going public three years ago. Google's core services and technology are so fundamental to all things interactive, it can put itself in the middle of any trend or business and blow away competitors. The combination of Google's scale and agility, vast resources and consumer intelligence make it the $700-plus share gorilla in the media space. And its social-networking plan is just another step toward cyber-world domination.