Media Dojo

Archive for April, 2009

It’s 5pm somewhere in the world and time for a cocktail.

Let’s see. Mix one part Google App or EC2 with one part S3, add a pinch of Salesforce.com with a twist of Facebook, shake well and enjoy. Of course, as many of us learned during our first or second years of university, indulging in exotic tipples at scale often came to an embarasssing and/or nauseating conclusion.

Fortunately, some of the first true mixologists for cloud-based solutions are springing up. Combining products, services and strategic relationships with platform companies like Google or Amazon, enablers like Appirio provide a “middlelayer” rather than “middleware” for organizations trying out the cloud for select business functions. Based in San Mateo, Appirio basically helps its clients fast-track selected business functions onto the cloud by offering them a turn-key proposition. For a quick overview of Appirio, check out Media Dojo Tear Sheet–Appirio.

We spoke with Ryan Nichols, Vice-President of Product Development at Appirio about where he sees the low hanging fruit for media and advertising firms in the context of cloud computing for 2009 and where they should start.

Media Dojo: What are the initial conversations you’re having with media and advertising firms when it comes to cloud computing solutions?

Ryan Nichols: We have more of a functional go-to-market strategy than an industry-specific strategy. We see a lot of companies, media providers and advertisers included, starting with a straight up sales automation solution from Salesforce.com that they soon want to extend into adjacent functions. Practically, this might be extending the work they’re doing with SF.com into a Facebook application to drive word-of-mouth referrals. Another extension for media and advertisers as well as other companies might be to automate some of their lead generation and/or lead nurturing functions. So they might have started at the part of the funnel that’s one or two steps removed from sales and now want to migrate higher up the funnel to more marketing related functions.

MD: What is the relationship between social media and cloud computing?

RN: People have an intuitive sense that World of Mouth (WOM) referrals are the lowest cost highest quality way of building out their business. That’s why people measure things like a Net Promoter Score, which is great if you can get social media users to recommend your brand or product. The problem is that even if they already are prepared to recommend you to their circle, typically you need to put an application in their hands to close the loop. One of the more exciting things is not only does the cloud enable us to quickly build apps but the target platform, Facebook for example, is itself already a cloud-based system. That makes it simple, fast and inexpensive to connect the application to the platform. Going further, it’s possible to tie this platform to another cloud-based platform like SF.com, which would be almost impossible if we were dealing with on-premise software and infrastructure.

MD: Where does this easier integration fit with other published cloud benefits such as lower costs, pay-as-you-go pricing, or flexible scaling up or down?

RN: Those are all important value adds of cloud-based solutions. However, one thing I believe gets missed sometimes is our ability to use the cloud to prototype something rapidly and at low cost. Often, while a client is evaluating one of our deal proposals, we knock together a quick prototype to show them what a custom solution looks like for them. You’d be hard pressed to do that with on-premise technology because the cost of starting up is so high that it’s hard to be agile. Agility is a critical benefit once server cost savings are realized.

MD: What should media and advertising companies start doing in 2009 to get the most benefit out of cloud-based solutions?

RN: I think the key for most media and advertising people is to stop reading and start doing something. Start out with a small, initial project where you build an app for the cloud and learn. There’s no faster or better way to learn what works or doesn’t work for your company. At the business level, it means picking an app for which you were just about to call internal IT to provision and trying it out under an on-demand model. That’s the only way to stay on the development curve and ensure that a year from now you have a real strategy for your company. Cloud computing isn’t just about becoming world-class in your cost control of IT. It’s just as much about finding that innovation path that will take you into the next phase of your business.

[Editor's Note: Ryan came from a retail analytics background prior to joining Appirio. During our talk, he provided feedback and some useful pushback to my thesis below that the future of media lies in a retailer's mindset. I'll chew on his comments some more and then give that presentation another rev.]

Here’s the first of a series of presentations I’m working on. I’ve loaded a 9min screencast of a paper called “The Retail Future of Media and Advertising’. In the presentation, I contend that in a world of near infinite digital shelf space, successful media and advertising strategy will look more like consumer retail. It’s a think piece. I will follow up over the next few weeks with some data-centric presentations to back up some of the claims made here.

If you prefer reading, here is a PDF written in 2006 that contains the main argument.

The Future of Media is Retail

The last couple of interviews I’ve done with ooyala and Tumri have me thinking that we’re getting closer to a Just-in-Time World for media and marketing. By that, I mean that the action (the ability to profit disproportionately) is moving to how fast and how well you can customize a content experience or an ad at the margin. It used to be that leverage was all about aggregating eyeballs. No argument there in terms of creating an efficient media buy for a big advertiser. Scale has its advantages and always will.

But as we’ve found in other industries like automotive or consumer electronics, scale only makes you a player. Soon enough, you get a disruptive force like Toyota saying that you can customize the hell out of your car and we’ll build it, and ship it to your dealer in a week or less. That’s where scale takes on a whole new meaning. It’s no longer only the ability to spit out more units at a lower per unit cost. Scale becomes a game where the trick is how fast you can orchestrate a massive ecosystem to deliver an individualized experience.

I’m not saying we’re there today with media and advertising. But some of the building blocks have been put in place. Cloud infrastructures are becoming the assembly lines for a new breed of media and marketing disruptor. Whether it’s Tumri blowing up display ads into objects that are then re-assembled on the fly based on impression data. Or ooyala seeding video streams with a slew of clickable elements, the game is shifting. Like it or not, principles of e-commerce are being injected into media and advertising just like retail, travel, real estate, automotive, and financial services.

The advantages of scale will never go away. But how those advantages get re-distributed along the value chain and which new players control them, ah, now there’s an interesting question.

Stay tuned over the next couple of weeks. I’m banging out a 5-6min screencast called “When Media Acts like Software” to take a first stab at the idea of a JIT world for media and advertising. It’ll be a first rev so it’ll eventually join my 8th grade class picture at the bottom of the Marianas Trench. But that’s often the only way to learn. Just F*ckin’ Doo It as Nike would say had it started in New Jersey.

When I first heard that ooyala means cradle in Telugu (a South India language), I thought about that creepy flick with Rebecca De Mornay who quotes a riff from the 19th century poet William Ross Wallace, For the hand that rocks the cradle is the hand that rules the world.

Fortunately, ooyala’s CTO Sean Knapp isn’t as good looking nor as psychotic as Ms. De Mornay was in that film. That’s probably a good thing for video content players like AOL/Bebo, Armani, Joost, Electronic Arts and Glam who trust ooyala with managing and helping monetize their video assets on the cloud.  Sean co-founded ooyala with fellow Google and Stanford alumni Bismarck Lepe and his brother Belsasar Lepe. For a quick run-down on the company, check out the one pager. MD Tear Sheet on ooyala

Sean and I discussed the ooyala’s DNA, how it uses Amazon’s cloud, the trend toward clickable interactive video for clients such as Armani, as well as take-aways for marketers about what is possible here and now with interactive online video.

Media Dojo: What lit the spark for starting ooyala?

Sean Knapp: The original catalyst that Bismarck approached me to solve was how do we build a high level video destination site that would monetize better than with pre/post rolls, in-stream ads or overlays. We looked at it and noticed that we had a good bit of computer vision expertise in the company. We felt that if we could use computer vision techniques to mark up a video and make various elements clickable, we could make them more interactive and engaging, which would monetize better in the end. It’s the difference between having a banner ad and having AdWords where users were proactively engaging with the content and looking for more information.

MD: So where do Amazon’s cloud services come in?

SK: The original idea was to build an interactive video destination site. What ended up happening along the way true to Google engineering form was that we needed to solve a lot of different related problems. The first technical problem to solve was ingestion, or how will be take content into the system very easily from our content owners. So we starting building Backlot along with storage and video encoding services. But as a three man team, it didn’t make sense to start trying to build a network storage system even though we knew we needed one to store a lot of video content. It didn’t make sense to start building racks of servers when it was possible to buy instances of Amazon EC2. I could draw a lot of parallels between what we could buy from Amazon compared to the tools we used when we were at Google. From Amazon, we bought S3 storage services. At Google, we used GSS. We buy EC2 from Amazon. We used Google Borg for much the same thing. Basically, using cloud services made it much easier to grow quickly. Our goal is to help content owners successfully upload, distribute and monetize their video content online. The fact that it’s running mainly on the cloud is great but it’s not the ultimate value proposition. The cloud is simply the enabler that helps us innovate faster.

MD: Let’s define interactive video, what do you mean by it?

SK: Our goal is to make online video clickable. We want to find the points in a video stream where people might want to interact with a piece of content. Perhaps they’re attracted to the particular hat Halle Berry is wearing in Swordfish. They want to find out about that hat and maybe where to buy it. You might have an informational video where it’s even more important for people to be able to click on various items to expand an explanation. So the trick to making video interactive is two fold. First you need to populate it with targets that people can click if they want or skip. Those targets need to be discoverable at the points where people are likely to want something extra in their content. Then you need to link those targets to something else, maybe the latest stats for a college hoops player during March Madness, or maybe an e-commerce link so you can find a jersey or something like that.

MD: ooyala was recently involved in helping Armani create an interactive online fashion show. What happened with that?

SK:We got connected to Armani through an Italian online design shop called Shadow. They had used our technology and APIs previously for work they’d done for an Italian professional soccer team. They’d heard about our push into interactive video. So when Shadow got the contract to build Armani’s online fashion show, they pitched the idea of making the video clickable and Armani went for it.

[editor's note: go here to play with it-- http://www.emporioarmani.com/index.asp?ssp=1&tskay=3FD17CD7 ]

Basically, you choose whether you want to see the men or women’s line. As the models parade on the cat walk, you can mouse over their clothes to get a link to that look in the Armani catalog. It’s a pretty straight forward e-commerce implementation. The main point is that it’s entirely up to the user regarding when they want to engage closer to a transaction. No overlays or interstitials are involved. Just watch the video and when you see something you like, you take action.

From a marketing standpoint, interactive video is about increasing the overall engagement time for the user—but on their terms. Most users like to operate on the assumption they are in control so when they feel like their being interrupted or pushed in a particular direction, they tend to bail fairly quickly.

MD: All well and good—what are the potential gotchas with interactive video?

SK: One of the things that we’re finding is that interactive video doesn’t really work as an out-of-the-box solution. There’s not a default user experience that you can monetize immediately and predictably. We’ve found that every implementation has been custom built because everyone’s content is different. What will trigger user engagement in a fashion show is different than a sports event or a comedy or a drama or even an instructional video. So it’s important for content owners to be sophisticated about envisioning how interactivity can enrich the user’s experience, and by extension, lead to better chances at monetization. What happens, the different calls to action, and what is engaging depends very much on the content itself.

MD: Last question, where’s the money in all this?

SK: We’ve concentrated on the bread and butter issues to get to this point with ooyala. Longer term we see the value proposition expanding to look at how to monetize situations involving different users in different context. For example, if you’re running ads or pay-per-view, being able to dynamically price a view of a video direct to the user or direct to the advertiser could be huge. Should this stream price at 0.05 or 0.15? Well, the answer depends on the user, their specific context, and which ad inventory is available at that precise moment. We’ve all got access to much the same ad inventory. But it’s about who will get higher interaction and engagement because they’re showing the right ads to the right users at the right time. Optimizing at the margin to make milk out of that last 15-20% of possible revenue is the difference between a Yahoo! and a Google.

[Editor's hat tip to Alexa Lee for setting this up]

Online advertisers spend an obscene amount of money, time and effort to organize and target an audience, but often revert to a Soviet mentality with the variety of creative that ends up being delivered to the consumer.

We have pork with the rib side up! We have pork with the ribs side down! Choose!

There are a few companies that are trying to work the other side of the equation, namely how to optimize ad creative at the margin.

I spoke today with A.J. Kintner, Director of East Coast Sales with Tumri out of Mountain View. Tumri is blowing up ad creative into its constituent elements and re-assembling it on the fly to present a consumer with a unique ad message.

For a one pager on the company click here: MD Tear Sheet on Tumri

Here’s the gist of our conversation:

Media Dojo: What’s the problem that Tumri solves?

AJ: Ad creative is static for many reasons. Creative executions can be very time consuming to make and just as time consuming to capture and make sense of the data the ad throws off. I spoke with a group in South America working with a big IT advertiser. They needed 33 people for just one account to make the creative, capture and crunch the data, and use that insight for the next rev of the campaign. What we do is enable a team to launch an ad and then change pieces of it on-the-fly as the data rolls in on who clicked where, when, and under what conditions. So instead of having just creative 1, creative 2 or creative 3 that are going to be served up, we take the main elements that go into the execution (the background, the price point, product offer, color scheme, call-to-action) and reconfigure it hundreds of ways to find the best recipe for different customers.

MD: Kind of rapid prototyping for online ads

AJ: Yep

MD: Who are your customers?

AJ: We pitch to agencies, advertisers and publishers. For advertisers and agencies, our solution makes life a little easier on man hours and performance. At the same time, they’re learning about their consumers. So we helped Intel learn about which part of their ad creative that people were looking at, what they were clicking to find out more information. Within a 4-5 month period, Intel learned more about their consumers than in the 2.5 years they had been running web media in that space. It’s because we set up the creative in a way that they could actually learn how their users were interacting with their products.

MD: So Intel gets a twofer with better ad performance with customer research, yes? Where do you see that going where you’ve got rolling feedback between creative and research?

AJ: We were working with a major shoe company and were able to show them that anywhere from 15-20% of the click thrus on the ad originated from the brand logo. The brand logo was very small part of the overall banner. The creative agency wasn’t taking any action to raise the profile of the logo. It seemed that both the marketer and their agency were taking the brand for granted. But once they had the data suggesting that the brand was so strong that people were just clicking on it to go to the home page, they integrated that brand logo into a 2-3 second attention grabber before the rest of the ad started. A lot of advertisers take their brands for granted: “everyone knows who were are” etc.

MD: What do you see happening in the next six months from an industry point-of-view?

AJ: Look, things are changing so fast because of the general economic shifts to where what you knew last July isn’t relevant now. I will say that almost every marketer and agency is focusing on the bottom line and ROI like they were direct marketers. I’ve seen the conversation go at industry events in which a branding person talks about a new ad launch to another branding person, “New banner looks great. What’s the CTR?”

MD: Nothing like a recession to inject a direct marketing mentality into what had been a brand marketer’s world…

AJ: No doubt.

On Tuesday 31 March, I spent the day at Cloud Computing Expo at the Cloud Boot Camp run by Alan Williamson from AW2.0 from the UK. I did the entire day-long session because Alan is an independent systems integrator for cloud computing. TRANSLATION: he knows where the bodies are buried among the vendors landscapes.

Cloud computing isn’t the panacea that many are trying to foist onto media and marketing firms. In fact, there are certain applications in which loading them onto the cloud isn’t what you want. At the same time, shrewd buyers can achieve some stonking economies vis a vis their competitors by using the best parts of the current cloud infrastructure offers from the likes of Amazon, Google, GoGrid, Mosso and so forth. Media and marketing people need to start getting used to those names because they’ll start cropping up in strategy sessions.

Aside from a mind-numbing arrary of stats, war stories, insights, and customer horror/success stories, the main aspect I took away from Alan’s seminar is how we remain inside a 1994 mind set as it applies to cloud computing. Most everyone has an idea of the constituent parts of of the cloud, the main bottlenecks, and what to attack next. There is also a slew of narratives trying to capture the “essence” of cloud computing in some grand theory. The upshot is that there’s a lot of white space in the middle. Grand theories of how cloud computing will “change everything” jostle for position aside “how do I port my SQL database onto Amazon S3?” In other words, everyone knows that cloud computing could be hugely important, on par with Internet. At the same time, no one knows how all these constituent parts will fit together, who will make obscene money, who will survive but be different, and who’s toast.

Call me biased, but I start with the plumbing because all models leak eventually. Cloud computing will be no different. Alan’s take is unabashedly technical, with plenty of pointers to the good, the bad and the ugly.

Take a look at the posted slides at

http://www.aw20.co.uk/help/

OK…one of the first trial balloons at the intersection of cloud computing and media. Basic gist is that cloud computing will be the technology medium that flips media and advertising from a mass market business to a direct to consumer business. Cloud-based systems do so by changing the economics and performance of high end video production, syndication and ad serving. Cloud-native video will change the value consumers place on ALL forms of video content, just like simple HTML and blogging software changed the value consumers placed on ALL forms of text-based content. This will rock professional video producers/broadcasters/marketers even more than than their print-based counterparts.

AdWeek Column on Media and Advertising’s Killer Cloud