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  • feedwordpress 16:12:31 on 2020/06/29 Permalink
    Tags: , , , Top Posts   

    Marketers: Your Role In Social Discourse Is Critical 


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    How Brands Can Fix the Relationship Between Platforms, Audiences, and Media Companies (Hint: It’s Not a Boycott)

    (Second of a series. The first post reviews the media and platform ecosystem, and laments the role brand marketers have played in its demise.) 

    ***

    In my first post of this series, I laid out a fundamental problem with how digital media works today. Large digital platforms like Facebook and Google have cornered the market on audience attention, often with devastating impact on our national dialog. Along the way these platforms have developed sophisticated prediction and targeting engines which give marketers the ability to buy audiences with precision and scale. While this has been a boon for marketers’ businesses and the platforms’ profits, it’s also drained resources from independent, high-quality editorial outlets and stripped our national dialog of much-needed context.

    The loss of that context is at the core of an ever-growing #StopHateForProfit  social media boycott, which now includes huge brands like Unilever, Coca Cola, Verizon, and Honda. I’ll be writing about that next, but today I want to focus on how we got here, and what we can do about it.

    Over the past ten years, media companies have responded to their loss of audience by creating “viral” editorial that performs well inside the platform’s engagement-at-all-costs ecosystem.  Predictably, however, quality editorial – the context  journalists create for a living – rarely qualifies as viral. Besides flooding the platforms with videos of slippers which double as mops and two-second beer bongs, media companies have embraced Facebook and Google in other ways – selling them programming that never seems to gain audience or get renewed, building expensive and often unprofitable versions of themselves on each platform, or becoming platform advertisers themselves, a practice I call arbitrage in which media companies buy audience impressions wholesale and then mark them up to their marketer customers. In that first post, I spent a fair bit of time on arbitrage – mainly because I believe it’s a particularly despicable and self-defeating business practice.

    If we’re being honest with ourselves as media companies, none of our strategies of engagement with platforms have proven to be long-term business model winners. However, platforms own audience, and no amount of wishing it was otherwise will change that fact. If we want independent and quality editorial to maintain a vital place in our democracy, we have to imagine a new set of relationships between platforms, editorial, marketers and audiences. A promising innovation is already in place at one platform: Twitter.

    Twitter’s Unique Path

    Twitter has always been the underdog of the social networks – smaller, messier, less hell bent on conquering the world. But the service’s fast-twitch nature meant it quickly became an indispensable place for people to discover What’s Happening Right Now. Anything live and worth discussing – sports, news, gossip/culture – thrives there. News breaks on Twitter, but the rise of digital video ten years ago presented a significant barrier to growth. Given Twitter’s roots as a text-based service, the company needed to convince major media companies to view Twitter as a home for video content. Facebook and Google had YouTube and Instagram, and Twitter was playing from behind.

    In response, Twitter adopted a media-company friendly solution they called Twitter Amplify. Amplify has a unique model that fundamentally changes the power relationships between players in the media ecosystem. Most who use it give those fundamental changes little thought – they just see Amplify as a partnership tool, pure and simple. But once you grok Amplify’s unique approach, you realize its potential is wildly overlooked.

    In traditional media business models – which I call Packaged Goods Media – media companies create editorial, which attracts audience, which then attracts marketers, who pay media companies for access to the audience’s attention. Simplified, the ecosystem looked like this:

    In this simple model, marketers place their advertising messages inside the media companies owned and operated product, which the media company distributed itself. The advertising message was delivered in the context of quality editorial – editorial that the marketer had chosen proactively (within limits of church and state, of course) as part of a media planning process.  A critical assumption of this early model was this: Pairing relevant advertising messaging with quality editorial was vastly more successful for marketers – particular brand marketers – than advertising messaging delivered devoid of context. Before platforms, in fact, there were really only two channels for context-less advertising: Billboards and direct mail. Neither were particularly effective for building brands, though both had their place in the media ecosystem.

    But the rise of platforms created a new gatekeeper in this once-stable environment. Platforms quickly gained enviable audiences, but advertising models were slower to adapt.  Early in their development, Facebook and YouTube realized that to win even larger audiences, they needed to accommodate media companies’ editorial product on their platforms. To do so, they adopted a Packaged Goods Media model that looked an awful lot like the picture above.

    The bargain was simple: If you were a media company, you set up shop on the platform, acquired your own organic audience there, and once you got to a certain scale, you sold ads there – either on your own or in partnership with the platforms. Media companies early to these platforms – major TV networks, large newspapers, digital pioneers like Buzzfeed and Vox  – quickly built large audiences. But after a while, media companies realized that maintaining those audiences would prove difficult and expensive. Facebook and YouTube now controlled distribution. The media companies had built on the platform’s land, and if there’s one truth in capitalism, it’s this: landlords will always demand their rent.

    Media companies found themselves increasingly subject to the whims of the platforms’ algorithms and business models. They replicated a Packaged Goods Media model on top of the platforms, and discovered – shocker! – that they no longer owned the audiences they were trying to sell to marketers. Instead, they had to buy audience from the platforms, and resell it to marketers – again, on the platform. That deal wasn’t very good for anyone (save the platforms), and as marketers realized they could go direct to platforms to get their audiences more efficiently, the decline of traditional media was accelerated.

    How Amplify Works, And Why It (Really, Really) Matters

    Twitter’s Amplify points to a powerful new narrative. It works like this:

    1. Media company partners with Twitter to become an editorial partner, stands up editorial on platform (Twitter).
    2. Media company partners with marketer to support editorial on platform.
    3. Marketer and editorial use platform tools to identify both editorial and audience the marketer wishes to reach.
    4. Marketer uses its dollars to distribute both editorial and marketing messaging to audience.
    5. The platform and the editorial company split the revenue. All parties are aware of and read into the terms of the deal, no arbitrage is possible.

    In some ways, this feels similar to Packaged Goods Models of old. The marketer is wrapping its advertising message around editorial, just like in the pages of a magazine or a website before platforms dis-intermediated editorial from audience. And the results speak volumes: Campaigns that are contextually paired with good editorial tend to perform far better than campaigns without an editorial pairing.*

    But what gets missed is the revolution inside step #4 above. Amplify allows the marketer to use Twitter’s massive investment in advertising technology and audience development to define what audience it wants to reach, and then use a media company’s editorial as a lure to draw that audience through its marketing messaging. Let that sink in: The marketer – not the media company, not the platform, but the marketer – is responsible for putting the audience together with editorial. 

    The result is that on Twitter, a marketing partnership like the one The Recount has with Bank of America is a four-way win for every participant in the media ecosystem. The marketer gets scale, precision targeting, its choice of editorial (which allows for brand safety), and the resultant lift on the performance of its campaign. The editorial gets a direct revenue and business relationship with the marketer, and is exposed to audience members it otherwise would have to pay the platform to reach. The audience gets contextual advertising wrapped in content the audience finds interesting. And the platform, in this case Twitter, has a happy marketing partner, quality content distributed across its platform, and a revenue split with editorial.  Win, win, win, win.

    Amplify’s model puts the power of connecting audience and editorial in the hands of marketers – highlighting the crucial role marketers have always played in determining which editorial thrives in the media ecosystem. As I argued in my last post, far too many marketers have abdicated their responsibility as arbiters of which editorial deserves their financial support, opting instead to let Facebook and Google’s algorithms choose their audiences and their business results. Those algorithms will always favor a platform’s bottom line over the context and healthy dialog that quality editorial can provide. Programs like Amplify finally combine the power of a platform’s scale, data, and precision with the marketers’ responsibility to support editorial’s crucial role in social discourse.

    Finally, and importantly, the best Amplify partnerships deepen what have become attenuated relationships between large brands and the media companies that depend on them. If companies really are serious about  “multi-stakeholder capitalism” and becoming a “force for good,” they have to start engaging with – and supporting – the story at a deeper level. It’s time for marketers to lead again.

    As I write this, the media world is embroiled in a multi-layered narrative involving hate speech, platform boycotts, health crises, and economic catastrophes. But the way forward is not to pull back spending indiscriminately and walk away. Instead, marketers must do the work of understanding the problems at hand, then actively lean into solutions that can address them. Memo to all you marketers out there: Don’t sleep on Twitter Amplify.

    The third post in this series will explore the current “social media boycott” in light of the first two posts. 

    * Far, far better. If you are marketer, please be in touch and we’d be happy to share just how much better – jbat at therecount dot com. 

     
  • feedwordpress 15:31:31 on 2020/06/17 Permalink
    Tags: , , , , , Recount Media, , The Recount, , Top Posts,   

    Marketers Have Given Up on Context, And Our National Discourse Is Suffering 


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    It’s getting complicated out there.

    Marketers – especially brand marketers: Too many of you have lost the script regarding the critical role you play in society. And while well-intentioned TV spots about “getting through this together” are nice, they aren’t a structural solution. It’s time to rethink the relationship between marketers, media companies (not “content creators,” ick), and the audience.

    So let’s talk about it. Grab your favorite beverage and read along. I’m heading into a bit of media theory for the next couple thousand words – I hope this will start an interesting conversation.

    For those of you who want a TL:DR summary, here it is: It’s time to get back to the work marketers used to be really good at: Deciding on the appropriate context in which to engage your audience. And it’s time to pull back from a habit most of you have fallen into: Letting the machines choose your audience for you. Thanks to new approaches which fuse at-scale ad targeting with high-quality editorial product, you can step into this renewed role without sacrificing the reach, precision, and targeting afforded by the likes of Facebook, Google, Twitter, and their kin. To understand how, let’s review some history.

    The Old Media Model

    If you read this site back when I wrote regularly on media (roughly 2003-2015), you’ll recall I laid out several basic tenets about how the media business works. It’s comprised of three core components: Editorial (the media company’s content), Audience (people who give their attention to the content), and Marketer (commercial actors who desire the Audience’s attention in the context of the Editorial). Of course, in the past ten years, a fourth component has eclipsed all three: The Internet Platform.

    Before the major Internet platforms deconstructed the media business, the three original components came together in what we’ll call a media product (I’m still partial to “publication,” but many think only of print when they hear that word). Print, television shows, and early web sites all served as vessels for a commercial relationship between  Editorial, Audience, and Marketer. The media company took the financial risk of creating and distributing the media product, and if successful, the marketer paid to run advertising inside the media product. In some cases, the audience also paid a subscription fee for the editorial. But for most media companies, advertising support was crucial to chin the bar of profitability and make a go of it as a business.

    A critical element of the media-product-as-vessel model for commercial transactions was that context matters. The media product created context for audience engagement, and if the marketer offered messaging that aligned with that context, it stood to reason that the audience would be more receptive to the advertiser’s message. Suffice to say that with the rise of audience buying on massive platforms, context has been lost, with nearly incalculable downsides across the media ecosystem (and society at large). More on that later on.

    Meanwhile, back in those pre-platform days, distribution was important, but it was also a constant. Most media companies consolidated distribution by acquiring broadcast licenses or cable networks (for television) or print distribution networks (if you were a magazine or newspaper company). And if you were a media startup, you could leverage those distribution networks for a relatively predictable rent – often without spending any capital up front. When we started Wired, for example, we secured newsstand distribution by agreeing to split the revenue earned by our nascent magazine with our distribution agent.

    I call this old-school model “Packaged Goods Media.” Fifteen years ago I noted that “PGM” was giving way to a new model, which I termed “Conversational Media,” or CM. CM, of course, was the precursor to “social media” – Twitter, Facebook, YouTube – and as I thought out loud about this new phenomenon, I noted several crucial distinctions between it and Packaged Goods Media. I predicted that the economics of Editorial, Audience, and Marketing were all going to change dramatically. In many ways I was spot on. But in several others, I was dead wrong. Here’s a summary of a few key points:

    • Editorial models would evolve from “dictation” to “conversational,” where the audience – and knowledge of the audience through data – became a central driver of editorial creation.
    • Distribution would become nearly free, obviating the rent-seeking monopolies held by major media companies. In fact, I wrote: “economic differentiation based on the control of distribution – the very heart of PGM-based business models – is irrelevant in CM-based services.”
    • Online, publications become more like a service, rather than a product. I noted that software, which was still largely a packaged product, was also heading in this direction. That means media will have different economics and different advertising models over time (I called them “native advertising” at the time).

    I’d argue that over the next ten years I got the first and third predictions relatively right, but I entirely whiffed on how distribution would play out. I simply failed to imagine how Facebook, Google, and others would leverage their newfound control of audience attention. In one piece from 2006, I wrote:

    “…finding massively scaled Conversational Media companies [besides Google] is a rather difficult search … it’s unclear whether CM companies will mature into massive conglomerates like Time Warner.”

    Well, it’s certainly clear now. Facebook, Google, and their peers are among the most powerful and well-capitalized companies in the world, and they got that way by doing one thing very well: Capturing the attention of billions of us. That gives them a near monopoly on digital distribution, which they’ve leveraged into a near monopoly on digital advertising. In the process, these tech platforms have eliminated the traditional role of publishers as a proxy for audience interest and engagement. I used to believe this trend spelled the end of high-quality independent media brands – indeed, it’s why I didn’t start a media brand after selling Federated back in 2013. But media models are always evolving, and I now see a new way forward. To understand that, we must first review where we stand today. And to do that, we must examine arbitrage.

    The Arbitrage 

    If I were writing a sequel to “The Search” focused solely on how digital media models have shifted in the past 15 years,  I’d probably title it “The Arb.”

    It would not be a pretty story. In the past ten years, audience arbitrage has become a dominant model of the digital media business. It’s an awful business practice that erodes trust, devalues media brands, and dilutes the importance of marketing. What follows is a bit of a rant, but hell, you’re still reading at this point, so refill your glass, and let’s get to it.

    The dictionary definition of arbitrage is “the simultaneous buying and selling of securities, currency, or commodities in different markets or in derivative forms in order to take advantage of differing prices for the same asset.”

    In media, the asset being arbitraged is audience attention. The arbitrageurs are publishers. Their enablers are the major tech platforms, fueled by dollars from advertisers.

    Here’s how it works. A big publisher like Buzzfeed or Cheddar sells a million-dollar advertising deal to a marketing brand. The media company guarantees the marketer’s message will collect a certain number of audience impressions or views, charging the marketer a “cost per thousand” for those impressions. (Known as “CPM,” cost per thousand pricing ranges widely, from a few pennies to $25-40 for “premium” placements). Utilizing a Packaged Goods media model, the publisher might fulfill those impressions on its “owned and operated” properties, but over the past ten years, doing so  has accrued significant drawbacks. The top three:

    • It’s expensive. Acquiring and retaining audiences on a media company’s own property is often far more costly than finding those same audiences on an at-scale platform like Facebook or Google.
    • It lacks sophisticated targeting. In the past decade, marketers have grown accustomed to the data-rich precision of large platforms. They don’t want to pay for just any old Buzzfeed or Cheddar audience member. They want their messaging to reach exactly the target they specify, and most publishers don’t have either the technology or the audience scale to fulfill the data-driven demands of modern marketers.
    • It forces extra work on the marketer. I am not the first, nor will I be the last to note that marketers and agencies don’t like to do extra work. While plenty of larger publishers have built high-quality advertising solutions on their owned and operated channels, marketers view these point solutions as  just one more channel they have to manage, analyze, and report on. It’s just So Much Easier to buy Facebook, after all.

    Because of all this and more, publishers have become audience buyers on Facebook, Google, and other networks. Enterprising publishers began packaging their own content with marketing messages from their sponsors, then they got busy promoting that bundle to audiences on Twitter, Facebook, and Youtube, among others.

    This is where “the arb” comes in: The publisher will charge the marketer, say, a $15 CPM, but acquire their audiences on Facebook for $7, clearing an $8 profit on every thousand impressions.

    You might ask why the platforms or the marketers don’t put a stop to this practice, and you’d be right to ask. But consider the economic incentives, and things get a bit more clear. The platforms are getting paid for what they do all day long: the delivery of precise audience impressions at scale. As far as platforms are concerned, the media brands are just advertisers in different dress.  Over the years, Facebook and Google have even accommodated the arbitrage by connecting all parties directly through their advertising technology systems.

    OK, so the platforms get paid to deliver audiences to marketers on behalf of media companies, but why on earth do the marketers put up with being arb’d? Couldn’t they just pay the same $7 CPM directly to Facebook, eliminate the middle man, and save the $8 spread?

    Well, indeed they can, and in most cases when it comes to buying audience on Facebook or Google, that’s exactly what they do. But remember my comments about context way up toward the top of this article? Some marketers still believe that the context of a media brand can help their messaging perform better, and they’re not wrong in that belief.  So they’ll pay a bit more to have their messaging associated with what they believe is quality editorial. And if that media brand does the work of acquiring that audience for them, so much the better – that’s less work for the marketer to do.

    But let me be clear: arbitrage sucks. Arbitrage is only lucrative in markets with imperfect information. It’s usually a great strategy in the early stages of a new ecosystem, when media buyers are less familiar with how advertising technology works. As those buyers get smarter, they start to squeeze the media company’s margins, devaluing content and context, and pressing ever closer to the price they could get directly from the platform. A good example is Demand Media – a company that, a decade ago, managed to insert itself between Google’s search algorithms and an advertiser’s desire to be associated with content around a particular topic. Demand pulled off a billion-dollar IPO based on creating advertiser-friendly “content farms” around popular Google searches. But advertisers figured out the arb, and Demand’s once billion-dollar valuation fell more than twenty fold in the past five years.  A similar fate has befallen the once high-flying arbitrageurs  of social media. Cheddar, Vice, BuzzFeed, and many others all played the game, but over time, markets will root out an arb. (Cheddar was smart enough to sell before its arb was uncovered – but it sold at a fraction of the sky-high valuations its peers once held).

    But wait, one might ask – aren’t the media companies adding true value? What about that context, which makes a marketer’s message more relevant and engaging? Isn’t that worth something?

    It certainly is, but this is where the lack of transparency around ad buying on platforms comes into play. Audience buying is cloaked in opacity – the major platforms are deeply invested in making sure no one truly understands how attention is priced. That means a media company buying audience on Facebook or Google will always be at an informational disadvantage – exposing them to a new kind of arbitrage, one executed by the platform’s own algorithms and benefiting the platform’s bottom line. Again, arbitrage works best in markets with asymmetric information features – and informational asymmetry is built into how Platforms operate. Over the past five or so years, most major media companies have come to realize they’re the ones being gamed.

    Audience arbitrage on platforms has even more destructive attributes. Because media buyers have outsourced their audience acquisition to either the media company or the platform itself, the marketer becomes disconnected from the context of its audience. Millions of impressions are scattered across millions of tiny content bundles, all of which are lost in a sea of endless posts on nearly every imaginable topic. The context and meaning that holds all brands together is lost.  Media companies, pressed by ever-thinning margins, will cut corners, buying “junk traffic” or worse, creating junk content that titillates or tricks audiences into false engagement. On the surface, boxes get checked, audiences get served, impressions get logged. But over time, editorial content deteriorates, deep relationships between brands and audiences attenuate, and the media ecosystem begins to fail.

    So what can be done about it?

    Well, at The Recount we’re exploring a way forward, through a brand new partnership we’re launching on Twitter this month. We’re calling it “Real-Time Recount,” and in the next installment of this post (I’m pushing 2500 words here, after all), I’ll explain more about the theory of the case behind it. For now, you can read more about what we’re doing in this Ad Age piece (paywalled, alas), or over on Fred’s blog. Thanks for coming along, and I look forward to the conversation I hope this will spark.

    Image: http://shop.drywellart.com/product/bourbon-empty-glass-print
     
  • feedwordpress 02:52:58 on 2020/01/06 Permalink
    Tags: , , , , , , , , , Top Posts,   

    Predictions 2020: Facebook Caves, Google Zags, Netflix Sells Out, and Data Policy Gets Sexy 


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    A new year brings another run at my annual predictions: For 17 years now, I’ve taken a few hours to imagine what might happen over the course of the coming twelve months. And my goodness did I swing for the fences last year — and I pretty much whiffed. Batting .300 is great in the majors, but it kind of sucks compared to my historical average. My mistake was predicting events that I wished would happen. In other words, emotions got in the way. So yes, Trump didn’t leave office, Zuck didn’t give up voting control of Facebook, and weed’s still illegal (on a federal level, anyway). 

    Chastened, this year I’m going to focus on less volatile topics, and on areas where I have a bit more on-the-ground knowledge — the intersection of big tech, marketing, media, and data policy. As long time readers know, I don’t prepare in advance of writing this post. Instead, I just clear a few hours and start thinking out loud. So…here we go.

    1. Facebook bans microtargeting on specific kinds of political advertising. Of course I start with Facebook, because, well, it’s one of the most inscrutable companies in the world right now. While Zuck & Co. seem deeply committed to their “principled” stand around a politician’s right to paid prevarication, the pressure to do something will be too great, and as it always does, the company will enact a half-measure, then declare victory. The new policy will probably roll out after Super Tuesday (sparking all manner of conspiracies about how the company didn’t want to impact its Q1 growth numbers in the US). The company’s spinners will frame this as proof they listen to their critics, and that they’re serious about the integrity of the 2020 elections. As with nearly everything it does, this move will fail to change anyone’s opinion of the company. Wall St. will keep cheering the company’s stock, and folks like me will keep wondering when, if ever, the next shoe will drop. 
    2. Netflix opens the door to marketing partnerships. Yes, I’m aware that the smart money has moved on from this idea. But in a nod to increasing competition and the reality of Wall St. expectations, Netflix will at least pilot a program — likely not in the US — where it works with brands in some limited fashion. Mass hysteria in the trade press will follow once this news breaks, but Netflix will call the move a pilot, a test, an experiment…no big deal. It may take the form of a co-produced series, or branded content, or some other “native” approach, but at the end of the day, it’ll be advertising dollars that fuel the programming. And while I won’t predict the program augurs a huge new revenue stream for the company, I can predict that what won’t happen, at least in 2020: A free, advertising-driven version of Netflix. Just not in the company’s culture. 
    3. CDA 230 will get seriously challenged, but in the end, nothing gets done, again. Last year I predicted there’d be no federal data privacy legislation, and I’m predicting the same for this year. However, there will be a lot of movement on legislation related to the tech oligarchy. The topic that will come the closest to passage will be a revision to CDA 230 —the landmark legislation that protects online platforms from liability for user generated content. Blasphemy? Sure, but here we are, stuck between free speech on the one hand, massive platform economics on the other, and a really, really bad set of externalities in the middle. CDA 230 was built to give early platforms the room to grow unhindered by traditional constraints on media companies. That growth has now metastasized, and we don’t have a policy response that anyone agrees upon. And CDA 230 is an easy target, given conservatives in Congress already believe Facebook, Google, and others have it out for their president. They’ll be a serious run at rewriting 230, but it will ultimately fail. Related…
    4. Adversarial interoperability will get a moment in the sun, but also fail to make it into law. In the past I (and many others) have written about “machine readable data portability.” But for the debate we’re about to have (and need to have), I like “adversarial interoperability” better. Both are mouthfuls, and neither are easy to explain. Data governance and policy are complicated topics which test our society’s ability to have difficult long form conversations. 2020 will be a year where the legions of academics, policy makers, politicians, and writers who debate economic theory around data and capitalism get a real audience, and I believe much of that debate will center on whether or not large platforms have a responsibility to be open or closed. As Cory Doctorow explains, adversarial interoperability is “when you create a new product or service that plugs into the existing ones without the permission of the companies that make them.” As in, I can plug my new e-commerce engine into Amazon, my new mobile operating system into iOS, my new social network into Facebook, or my new driving instruction app into Google Maps. I grew up in a world where this kind of innovation was presumed. It’s now effectively banned by a handful of data oligarchs, and our economy – and our future – suffers for it. 
    5. As long as we’re geeking out on catchphrases only a dork can love, 2020 will also be the year “data provenance” becomes a thing. As with many nerdy topics, the concept of data provenance started in academia, migrated to adtech, and is about to break into the broader world of marketing, which is struggling to get its arms around a data-driven future. The ability to trace the origin, ownership, permissions, and uses of data is a fundamental requirement of an advanced digital economy, and in 2020, we’ll realize we have a ton of work left to do to get this right. Yes, yes, blockchain and ledgers are part of the discussion here, but the point isn’t the technology, it’s the policy enabling the technology. 
    6. Google zags. Saddled with increasingly negative public opinion and driven in large part by concerns over retaining its workforce, Google will make a deeply surprising and game changing move in 2020. It could be a massive acquisition, a move into some utterly surprising new industry (like content), but my money’s on something related to data privacy. The company may well commit to both leading the debate on the topics described above, as well as implementing them in its core infrastructure. Now that would really be a zag…
    7. At least one major “on demand” player will capitulate. Gig economy business models may make sense long term, but that doesn’t mean we’re getting the execution right in the first group of on demand “unicorns.” In fact, I’d argue we’re mostly getting them wrong, even if as consumers, we love the supposed convenience gig brands bring us. Many of the true costs of these businesses have been externalized onto public infrastructure (and the poor), and civic patience is running out. Plus, venture and public finance markets are increasingly skeptical of business models that depend on strip mining the labor of increasingly querulous private contractors. A reckoning is due, and in 2020 we’ll see the collapse of one or more larger players in the field.
    8. Influencer marketing will fall out of favor. I’m not predicting an implosion here, but rather an industry wide pause as brands start to ask the questions consumers will also be pondering: who the fuck are these influencers and why are we paying them so much attention? A major piece of this — on the marketing side anyway — will be driven by a massive increase in influencer fraud. As with other fast growing digital marketing channels, where money pours in, fraud fast follows — nearly as fast as fawning New York Times articles, but I digress. 
    9. Information warfare becomes a national bogeyman. If we’ve learned anything since the 2016 election, it’s this: We’ve taken far too long to comprehend the extent to which bad actors have come to shape and divide our discourse. These past few years have slowly revealed the power of information warfare, and the combination of a national election with the compounding distrust of algorithm-driven platforms will mean that by mid year, “fake news” will yield to “information warfare” as the catchphrase describing what’s wrong with our national dialog. Deep fakes, sophisticated state-sponsored information operations, and good old fashioned political info ops will dominate the headlines in 2020. Unfortunately, the cynic in me thinks the electorate’s response will be to become more inured and distrustful, but there’s a chance a number of trusted media brands (both new and old) prosper as we all search for a common set of facts.
    10. Purpose takes center stage in business. 2019 was the year the leaders of industry declared a new purpose for the corporation — one that looks beyond profits for a true north that includes multiple stakeholders, not just shareholders. 2020 will be the year many companies will compete to prove that they are serious about that pledge. Reaction from Wall St. will be mixed, but I expect plenty of CEOs will feel emboldened to take the kind of socially minded actions that would have gotten them fired in previous eras. This is a good thing, and likely climate change will become the issue many companies will feel comfortable rallying behind. (I certainly hope so, but this isn’t supposed to be about what I wish for…)
    11. Apple and/or Amazon stumble. I have no proof as to why I think this might happen but…both these companies just feel ripe for some kind of major misstep or scandal. America loves a financial winner — and both Amazon and Apple have been runaway winners in the stock market for the past decade. Both have gotten away with some pretty bad shit along the way, especially when it comes to labor practices in their supply chain. And while neither of them are as vulnerable as Facebook or Google when it comes to the data privacy or free speech issues circling big tech, both Apple and Amazon have become emblematic of a certain kind of capitalism that feels fraught with downside risk in the near future. I can’t say what it is, but I feel like both these companies could catch one squarely on the jaw this coming year, and the post-mortems will all say they never saw it coming. 

    So there you have it — 11 predictions for the coming year. I was going to stop at 10, but that Apple/Amazon one just forced itself out — perhaps that’s me wishing again. We’ll see. Let me know your thoughts, and keep your cool out there. 2020 is going to be one hell of a year. 

     
  • feedwordpress 23:50:29 on 2018/01/03 Permalink
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    My Predictions for 2018 


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    The post My Predictions for 2018 appeared first on John Battelle's Search Blog.

    (cross posted from NewCo Shift)

    So many predictions from so many smart people these days. When I started doing these posts fifteen years ago, prognostication wasn’t much in the air. But a host of way-smarter-than-me folks are doing it now, and I have to admit I read them all before I sat down to do my own. So in advance, thanks to Fred, to Azeem, to Scott, and Alexis, among many others.

    So let’s get into it. Regular readers know that while I think about these predictions in the back of my mind for months, I usually just sit down and write them at one sitting. That’s what happened a year ago, when I predicted that 2017 would see the tech industry lose its charmed status. It certainly did, and nearly everyone is predicting more of the same for 2018. So I won’t focus on the entire industry this year, as much as on specific companies and trends. Here we go….

    1. Crypto/blockchain dies as a major story this year. I know, this is a silly thing to say given all the hype right now. But the Silicon Valley hype cycle is a pretty predictable thing, and while new currencies will continue to rise, fall, and make and lose tons of money, the overall narrative thrives on the new, and there’s simply too much real-but-boring work to be done right now in the space. Does anyone remember 1994? Sure, it’s the year the Mozilla team decamped from Illinois to the Valley, but it’s not the year the Web broke out as a mainstream story. That came a few years later. 2018 is a year of hard work on the problems that have kept blockchain from becoming what most of us believe it can truly become. And that kind of work doesn’t keep the public engaged all year long. Besides, everyone will be focused on much larger issues like…
    2. Donald Trump blows up. 2018 is the year it all goes down, and when it does, it will happen quickly (in terms of its inevitability) and painfully slowly (in terms of it actually resolving). This of course is a terrible thing to predict for our country, but we got ourselves into this mess, and we’ll have to get ourselves out of it. It will be the defining story of the year.
    3. Facts make a comeback. This has something to do with Trump’s failure, of course, but I think 2018 is the year the Enlightenment makes a robust return to the national conversation. Liberals will finally figure out that it’s utterly stupid to blame the “other side” for our nation’s troubles. Several viral memes will break out throughout the year focused on a core narrative of truth and fact. The 2018 elections will prove that our public is not rotten or corrupt, but merely susceptible to the same fever dreams we’ve always been susceptible to, and the fever always breaks. A rising tide of technology-driven engagement will help drive all of this. Yes, this is utterly optimistic. And yes, I can’t help being that way.
    4. Tech stocks overall have a sideways year. That doesn’t meant they don’t rise like crazy early (already happening!), but that by year’s end, all the year in review stock pieces will note that tech didn’t drive the markets in the way they have over the past few years. This is because the Big Four have some troubles this coming year….
    5. Amazon becomes a target. Amazon is the most overscrutinized yet still misunderstood company in all of tech. For years it’s built a muscular and opaque platform, and in 2017 it benefitted from the fact that, so far anyway, Russians haven’t found a way to use e-commerce to disrupt western democracy. Yes, Trump seems to have a bug up his bum about the company, but his tweets last year seemed to only increase Amazon’s teflon reputation with the rest of society. In 2018, however, things will change for the worse. The company is smart enough to keep hiding its power — it hasn’t accumulated the cash of its GAFA rivals, nor does it play (as much) in the high profile worlds of media and politics. But by 2018, the company will find itself painted into something of a box. Last year I thought the fear of automation and job losses would dominate the political discussion, but Russia managed to eclipse those concerns. This is the year Amazon becomes the poster child for future shock. In particular, I expect the company’s “Flex” business to come under serious scrutiny. And what it’s doing with in house brands is the equivalent of Google giving preference to its own products in search results (that hasn’t worked out so well in Europe). Further tarnishing its image will be its lack of leadership on social issues — Jeff Bezos is no Tim Cook when it comes to empathy. By year’s end, Amazon’s reputation will be in jeopardy. Then again, I do think the company will be nimbler than most in responding to that threat.
    6. Google/Alphabet will have a terrible first half (reputation wise), but recover after that. Why a terrible first half? Well, I agree with Scott, there’s another shoe to drop in the whole Schmidt story, not to mention more EU fines and fake news fallout, and that will kick off a soul-searching first half for the search giant. The company will find itself flat-footed and in need of some traditional corporate revival tactics — ever since Page stepped back into the obscurity of Alphabet, the company has lacked a compelling overarching narrative. I’m not sure how the company recovers its mojo, but it could be by pushing deeper into a strategy of letting its children grow up outside the Alphabet conglomerate structure. Perhaps not a government driven breakup, per se, but a series of spin outs, led by Sundar Pichai (Google), Susan Wojcicki (YouTube), and perhaps a new spinout around Doubleclick/Adtech, possibly run by Neal Mohan. Alphabet will remain as a holding company with stakes in all these newly (or soon to be newly) public companies, as well as a place that incubates new ventures and figures out what the hell to do with Nest.
    7. Facebook. Ah, what to say about Facebook. Well, let’s just say the company muddles through a slog of a year, with a lot of rearguard work politically, even as it starts to dawn on the world that maybe, just maybe, every advertiser in the world doesn’t want to be handcuffed to the company’s toxic engagement model. Of course, with YouTube in particular, Google has this issue as well, so here’s my Facebook prediction, which is more of an ad industry prediction: The Duopoly falls out of favor. No, this doesn’t mean year-on-year declines in revenue, but it does mean a falloff in year-on-year growth, and by the end of 2018, a increasingly vocal contingent of influencers inside the advertising world will speak out against the companies (they’re already speaking to me privately about it). One or two of them will publicly cut their spending and move it to other places, like programmatic (which will have a sideways year more than likely) and places like….
    8. Pinterest breaks out. This one might prove my biggest whiff, or my biggest “nailed it,” hard to say. But for more, see my piece from earlier in the weekAdvertisers will find comfort in Pinterest’s relatively uncontroversial model, and its increasingly good results. The big question is whether Pinterest can both scale its inventory in a predictable and contextual way, and whether it can make its self service/API-based platform super simple to use. Oh, and of course continue to attract a growing user base. Early signs are that it’s doing all three.
    9. Autonomous vehicles do not become mainstream. I’ve said it before, I’m saying it again: This shit is complicated, and we’re not even close to ready. We’ll see a lot of cool pilots, and maybe even one (probably small) city will vote to let them run amuck. But I just don’t see it happening this year. However, I do think 2018 will be the year that electric vehicles are accepted as inevitable.
    10. Business leads. Business doesn’t change by fiat, it changes through the slow uptake of new social norms. And a crucial new norm in business poised to have a breakout year is the expectation that companies take their responsibilities to all stakeholders as seriously as they take their duty to shareholders“All stakeholders” means more than customers and employees, it means actually adding value to society beyond just their product or service. 2018 will be the year of “positive externalities” in business, and yes, NewCo will be there to take notes on those companies who manage to live up to this new normal. A good place to start, of course, is the Shift Forum in less than two months. I hope to see you there, and have a great 2018!

    The post My Predictions for 2018 appeared first on John Battelle's Search Blog.

     
  • feedwordpress 19:28:05 on 2017/12/19 Permalink
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    Predictions 2017 – How’d I Do This Year? 


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    The post Predictions 2017 – How’d I Do This Year? appeared first on John Battelle's Search Blog.

    Every year, I make predictions, and every year, I score myself. As I wrote nearly 12 months ago, 2017 felt particularly unpredictable. As it turns out, my musings were often on target. Except when they weren’t…

    I’ve played with all manners of scoring over the years, but this year I’m going with a straight zero to ten rating. Zero if I whiffed entirely, ten if I hit it out of the park, and some kind of partial credit in between. Then add ‘em up, divide by the number of predictions, and that’ll be my overall batting average.

    So let’s see how I did. I made ten predictions, so to each in turn….

    #1: The bloom comes off the tech industry rose. I believe I hit this one out of the park. The backlash is at such a fever pitch, it seems tech has been crucified forever, but I peg the beginning of the end at Susan Fowler’s astonishing takedown of Uber, which was posted in mid February of 2017. Not only did her revelations precipitate the fall of Travis Kalanick and set the tone for the #MeToo movement in tech, it also gave the press an antagonist it could truly villainize, which set the stage for later takedowns of Facebook, Google, Amazon, and Apple. Multiple books (the FourWorld Without Mind, etc) piled on, as did the Russia/Facebook sh*tshow (and hearings), and the concerns of former tech engineers like Tristan Harris, whose “Time Well Spent” movement broke out in 2017. Overall, it was one hell of a bad year for tech (and to be honest, tech brought it on itself), and my words in January certainly rang true: “2017 will be the year the industry is cast as a villain — for its ravenous and largely opaque data collection practices, its closed and self-serving approach to its own platforms, and its refusal to acknowledge or address the very real externalities…created by its products and services.”Score: 10 of 10.

    #2: The conversation economy breaks out. This one is harder to judge. You may recall that a year ago, chatbots were all the rage, and voice-based interfaces like Alexa and Google Home were a novelty. One year later, chatbots have faded (but “appbots” are on the rise), and voice-driven systems have secured a place in our shared culture. That was a fast rise, comparatively speaking. In my post, I wrote: “Combine smart chat with voice, and … well, we’ll start to see a new UX for the web.” I still think that’s true, and we’ve had a year of very promising developments. But was it a breakout year? History alone will tell. Score: 5 of 10.

    #3. Open starts to win again. Oh boy. Every year I have what you might call an aspirational post, in that I very much hope it will come true, but I’m pretty sure it won’t come true. What I do know, however, is that in 2017, the table was well and truly set for open approaches to make a comeback. The reason? Well, see #1: Tech’s gotten too big, and too powerful, and the best way to dissemble that power is a swing back to open data (see this post for more). I remain firmly convinced that open is on the rise. But I don’t have much proof that 2017 is the year that trend began “to win again.” I wrote a year ago: “This year won’t be a turning point in this battle, but it will show meaningful progress.” It’s true that Amazon, Google, and Apple managed to settle their differences, and Microsoft Cortana laid down with Alexa, (and this) but…a dramatic proof of my thesis did not emerge this year. Score: 4 of 10.

    #4. Privacy will become a strong product category. I didn’t exactly predict the Equifax, Verizon, Uber, and scores of other data breaches which occurred this year, but they certainly reinforced my premise for prediction #4: Privacy is now front and center for all businesses and consumers. The question remains, however, if anyone will actually make a decent product suite that protects our privacy. Certainly in the business to business realm, privacy as a product boomed this year (there’s not a board in the world that didn’t authorize more spend for security this year). But last year I wrote: “But fear of cyber warfare, fraud, and over-reaching marketers and government will create huge openings for consumer friendly versions of currently opaque products like PGP, password managers, and the like.” Well, the openings are there. But the products? Not so much. Yet. Score: 7 of 10.

    #5. Adtech has a ripper of a year. OK, there has to be one that was pretty much a whiff, and this one is likely it. I am still an adtech bull, and the market still grew, if mainly led by Facebook, Amazon, and Google. But the independent adtech business did not have a ripper of a year, instead, it was a year of retrenching, mostly. Yes, good growth and strong business, but not the breakout I had predicted. Score: 2 of 10.

    #6. Apple releases a truly bad hardware product. Damn, if only Apple hadn’t pulled its HomePod product this year! Because if it had actually released it, it would have laid a massive egg, I’m sure of it (the company simply does not have the AI, voice recognition, and software chops). Instead, Apple was wise enough to realize it had a dud on its hand, and delayed what would have been a stinker of a consumer product. I even predicted it would be the HomePod that lays the egg…maybe someone at Apple reads me? In any case, I think I should get partial credit here, because besides predicting a bad release (the Watch release was pretty bumpy, after all), I also predicted 2017 would be the year the press turns on Apple, and that Apple would respond by acting like a typical corporation (repatriating cash to curry favor, buying companies to enter new markets, etc). It’s well on its way to doing just that (just bought Shazam, for example, and isn’t exactly fighting the tax bill). Score: 6 of 10.

    #7. A Fortune 100 company will announce its intention to become a B Corp. Nope. Wishful thinking. Despite Paul Polman *sounding* like the CEO of a B Corp on Twitter all year long, this did not happen. Move along, nothing to see here. Score: 0 out of 10.

    #8. President Trump leaves Twitter. Ha! He was kicked off by a mischeivious contractor, for ten whole minutes! I was…wrong. It’s true, debate did rage about why the president *should* be kicked off, and there’s still a few days left for Trump to decide he’s bigger than the blue bird, but besides that technicality, for which I am giving myself at least partial credit, this did not happen. SAD! Score: 2 of 10

    #9. Snap soars — then sours. This is where a picture is worth a thousand words:

    Score: 10 of 10.

    10. Human connection commands a premium in the workforce. In this prediction I also wrote: “In 2017, we’ll come to realize that we’re valuing the wrong things, and start a conversation about paying people to connect with each other — because if we can automate the other stuff, why the heck wouldn’t we value each other more?! Related: The conversation around Universal Basic Income (or my preferred term, the Citizens’ Dividend) will become white hot.” So it’s complicated, but I think overall the conversation around the future of work and UBI did become white hot, and we did see a marked shift toward valuing human connection in the workplace. However, it’s rather hard for me to prove that inside of just this year. As with a few of my predictions, only time will tell. So I’ll score myself a partial win on this one. Score: 6 of 10.


    So pulling back, how did I do, overall? Two whiffs (Adtech, B Corps), two home runs (tech backlash, Snap), three that were largely wins, one push, and two that were partial credit. Better than 50% — a score of 52 on a total of 100 points. Not terrible — about average over my nearly 15 years of doing this, stellar if you’re a major leaguer (of course, an “F” without a curve…). Regardless, I always have fun both making these predictions, and scoring myself against them twelve months later. I am honored that you take time to read my work, and I’ll be back early in the new year with predictions for 2018. Util then, have a great holiday season, everybody!

    Related:

    Predictions 2017

    Predictions 2016

    2016: How I Did

    Predictions 2015

    2015: How I Did

    Predictions 2014

    2014: How I Did

    Predictions 2013

    2013: How I Did

    Predictions 2012

    2012: How I Did

    Predictions 2011

    2011: How I Did

    Predictions 2010

    2010: How I Did

    2009 Predictions

    2009 How I Did

    2008 Predictions

    2008 How I Did

    2007 Predictions

    2007 How I Did

    2006 Predictions

    2006 How I Did

    2005 Predictions

    2005 How I Did

    2004 Predictions

    2004 How I Did

    The post Predictions 2017 – How’d I Do This Year? appeared first on John Battelle's Search Blog.

     
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