Is the balance of power shifting from advertising to PR?

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A thought-provoking article in this week’s The Economist, subtitled “As advertising struggles, PR steps into the breach,” suggests that PR will grow faster than the advertising industry. It refers to an internal Procter & Gamble study that found that PR gives a better return on investment than advertising. Investment bank Veronis Suhler Stevenson has forecast that in the U.S. spending on PR will increase at 9% annually over the next five years, ahead of growth in advertising spending. This has to be put into context. Total PR spending in 2005 was around $3.7 billion out of a total pool of $475 billion spent on advertising and marketing. However all of the PR spending goes to agencies, while the majority of the remainder goes to media companies.

Today PR entails being involved with every aspect of how people encounter information and make sense of it. It is about being engaged in the flow of messages through an intensely networked world. These capabilities are far more pertinent and valuable than formal advertising, that seeks to persuade from within a defined frame. There is no question that PR, or whatever the field morphs into, will hold greater sway in coming years. What I wonder about is how this will affect the integrity of the content we have access to. Already newspaper articles are often reprinted or rehashed press releases. PR agencies have significant blogger initiatives, looking to influence “citizen journalists” as well as traditional media representatives. How far will the influence of PR flow into our sources of information, and will it be possible to filter these effectively? The answer is yes, however it will require greater attentiveness, and willingness to seek multiple sources. The energy and sophistication that will go into influencing the flow of messages in the few next years will be staggering.

Steps to corporate blogging

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So, corporate executives are saying, it sounds like we need to be doing something about this “blogging” thing. So what do we do? According to Marketing Sherpa, there are five steps for major corporations launching blogs: set goals, assemble stakeholders, decide who can blog, write a formal blogging policy, and announce the policy. Sounds sensible, right? Not according to Robert Scoble, the most-read of the 1,000 plus Microsoft employees blogging to the world at large. “Oh joy, we’re going to get more committee-run blogs… Wrong first step, too. The right first step is to read blogs!” Robert provides a link to one of the more outspoken (and unauthorised) Microsoft bloggers, whose disclaimer on his Mini-Microsoft blog reads:

These are sole individual personal points-of-view and the posts and comments by the participants in no way represent the official point-of-view of Microsoft or any other organization. This is a discussion to foster debate and by no means an enactment of policy-violation. These posts are provided “as-is” with no warranties and confer no rights. So chill. And think.

In one recent post, Mini points to problems with the release of Visual Studio 2005, which may have been done before the product was mature. Immediately, Channel 9, the blogging and communication site for Microsoft developers, which is visible to outsiders, took up the issue and debated it. No stonewalling and corporate PR. Customers got to see what Microsoft developers personally thought about it, including strong reservations. Do customers trust Microsoft more as a result? Absolutely. They know they are seeing the reality of the debate, not just the corporate hype. Incidentally, all Microsoft blogs are stated to express personal opinions, not corporate ones.

Yes corporates do need to start with having some clarity on what they are doing, and establish appropriate parameters for blogging. But if this results in exactly the same communication as you get from the PR machinery, why bother? It’s just pretending that you believe in genuine discussions with your community. I should also add that the discussion about corporate blogging over-emphasizes external communication. Blogging is absolutely an immensely powerful tool to improve every aspect of your external relationships, not just in reputation management, branding, and loyalty, but also in areas like customer-driven innovation and quality improvement. However the use of blogs and other social software “inside the firewall” is equally important, as it represents the next phase of effective communication in large organizations, moving on from email and intranets, which today constrain as much as they enable effective collaboration and work.

Update: For a slightly different point of view see this post from former Microsofter Jim Fawcette on how Microsoft’s corporate blogging is helping to steer attention away from “real, insightful, internal criticism of Microsoft… with more bite than gums” such as Mini-Microsoft. Robert Scoble believes he’s the supposed decoy here and says that if that’s his role, he’s failing miserably.

BRW on blogging power

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Today’s issue of BRW, Australia’s major weekly business magazine, has an article on “Blogging Power”, which hopefully will contribute to putting blogging and social software on the corporate agenda in the country. After opening with the salutary lesson on how what started with a single blog post brought Sony low, the article quotes me on how Australian corporates are lagging on implementing social software, and draws out this theme throughout the piece. I can’t resist using another quote the journalist Kath Walter took from her interview of me, which I think captures one of the most important issues about blogging and social software (I think I’ve been slightly misquoted here – blogs are in fact an additional source of insight, but the basic point is important):

“People say ‘I haven’t got time to read blogs’, but it is the exact opposite of the truth. Blogs are a very efficient way of filtering information. They are not an additional source of information, they consolidate information.”

The article goes on to look at Telstra’s new “blogging” initiative, which ostensibly has the intent to be authentic. The head of new media at Telstra, Paul Crisp, says that bloggers will be allowed to “challenge and question how the company could work better”. Crisp goes on to say that Sol Trujillo, Telstra’s new chief executive, will not be blogging. “It would be nice if he did, but he has other things on his plate,” says Crisp. BRW is definitely a mainstream business publication, so this piece could help to plant seeds in the minds of Australian senior executives. This blog is featured in the article as one of a small list of blogs to look at – welcome to any visitors from reading the article!

The sorry state of Australian corporate blogging

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I am based primarily in Sydney (though I also have US residency and a secondary base in San Francisco to run the US operations of Advanced Human Technologies and for my speaking and consulting work there). As such, I find it extremely frustrating when I find that Australia is significantly behind in the adoption of key technologies. Australia has some fantastic talent, and the best of what is happening here is truly world-class. Yet often this doesn’t diffuse more broadly, notably into the Australian corporate sector, which can be rather slow on the uptake. A case in point is blogging.

It is over 3½ years since I submitted my manuscript for Living Networks, opening with a description of how corporate blogging was changing business. When I spoke at The Blogging Goes Mainstream conference in New York in May of this year, the conference title was describing the reality of the US market. As mentioned in this blog, not just companies like IBM, Microsoft, Google, and other technology companies are blogging, but also generally sceptical Fortune 500 companies such as Morgan Stanley, Boeing, Dresdner Kleinwort Wasserstein, General Motors, McDonalds, Disney, and a whole raft of mid-tier companies across all industries.

In some domains, Australia is doing very respectably in the global blogosphere. A number of Australian-based blogs rank in the top blogs globally, such as Cameron Reilly and Mick Stanic’s The Podcast Network, Darren Rowse’s ProBlogger (and other blogs) and Duncan Riley’s The Blog Herald. Journalists are fairly well represented, with The Bulletin’s Tim Blair, the Sydney Morning Herald’s Charles Wright, the Australian Financial Review’s Mark Jones, and The Age’s Leon Gettler all prominent and dedicated bloggers.

Yet despite this, virtually no major Australian corporations have even experimented with blogs, let alone applied them to useful effect.

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The debate on monetizing eyeballs

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At the end of September I wrote a blog post titled Back to Monetizing Eyeballs, suggesting that business models were returning to the good ol’ “monetizing eyeballs” model, driven by online advertising dollars finally reaching critical mass. At the end of November Om Malik, senior writer for Business 2.0 and also author of the excellent Om Malik on Broadband blog, wrote an interesting article in Business 2.0 titled “The Return of Monetized Eyeballs”. (I’m by no means suggesting Om is cribbing my work or is even likely to have seen my post, it’s just this idea is clearly ripe.) However the story doesn’t end there. Jason Calacanis, who recently sold Weblogs Inc., a blogging company, to AOL for a rumored $25 million, disagreed vehemently, and said so on his blog. Where this gets really interesting is that the New York Times then published an article on this discussion, Eyeballs Are Back, Or Maybe Not, describing the to-and-fro between Om, Jason, and other bloggers on whether or not we are back to a world of “monetizing eyeballs”, and what that implies for the tech economy. News is now generated by bloggers. I have seen numerous mainstream media articles that only quote blogs. In which case, why go to the newspaper, which intermediates the news? You might as well go straight to the source, the blogs of the best commentators, who are themselves generating the debate, interacting and reflecting on the most current issues, and providing rich input for us to make up our own minds.

What is the future for newspapers?

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Newspaper circulation appears to be on a slippery slope, with over the last six months U.S. newspapers showing a circulation drop of 2.6% for weekdays (after falling 1.9% the previous six months) and down 3.1% for Sundays (after a 2.5% drop in the half-year before). The worst was the San Francisco Chronicle, down 16.4% over the last six months, though this was the result of a deliberate strategy to cut unprofitable circulation. In this context, Robin Miller, editor-in-chief of Open Source Technology Group, the publisher of an array of online technology media sites, including Slashdot, has written a very interesting article titled A Recipe for Newspaper Survival in the Internet Age.

For those who haven’t come across it before, Slashdot (whose tagline is “News for Nerds”) is one of the founding examples of the power of participatory media. Readers submit to Slashdot news articles they think are interesting. A group of moderators then select the most pertinent articles, and readers can then submit their comments on the articles. Where the real magic happens is that every reader has the ability to rate the value, relevance, and interest of everyone else’s comments. Even though every story gets hundreds of comments, you can quickly sift through to find the ones that a large, sophisticated audience has collectively deemed most worth reading. Anyone can quickly delve in and get the condensed insights of this eclectic and intelligent group of über-nerds. Those whose comments are most highly rated are invited to become moderators for a period. The community collectively filters and creates the news, which is why Slashdot is one of the top few technology media sites in the world.

In his article, Miller uses lessons from Slashdot to provide recommendations to the newspaper industry. He discusses the need to draw in reader contributions, while addressing issues of both the value and propriety of their input. Most relevantly, Miller focuses on the local community strengths of newspapers. There is a massively important role to play being a voice for a community, something that newspapers have long proclaimed they do. Yet today they truly have the capability to provide their readers with that public voice. If they can do that effectively, there are a wide range of ways to build effective and sustainable business models around that, and absolutely keep their readers. However few newspapers today seem to be following this path other than half-heartedly.

The cycle of media

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While blogs link to each other extensively, one of their primary functions is referring to and adding commentary to articles in the mainstream media. One of the most valuable services of the blog search engines is that they show which media articles are of most interest and attract the most commentary from a universe of readers (see for example Technorati Popular News and Daypop Top News Stories). Pick up a dead-tree newspaper, and you have no inkling of what others have found interesting and what they have thought about it. The good folks at The Washington Post have recognized this gap, and so they now show inward blog links on their online articles. Take a look at this recent Washington Post article on FBI recruiting for their “porn squad”, which has attracted a lot of commentary. In the right hand column, half way down, you can see that (at last count) 614 blogs have linked to this article, and you can click through to see what each one has said about it. This is no longer just an interlinked world commenting on traditional press. The link back has been made, and a complete cycle of news and community commentary has been formed. Thus the boundaries between the traditional and participatory media begin to dissolve.

The future of public relations

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A few days ago I gave a keynote speech at the Public Relations Institute of Australia’s premier national conference for the owners of PR agencies – a very interesting crowd who are well in tune with the flow of messages through media and society. I covered three key themes:

&#149 Client relationships. Despite many PR agencies presenting themselves as doing “outsourced PR”, that’s not what clients today want. The future is in collaborative relationships, working closely with clients to combine your expertise.

&#149 Social networks. Today, everything is a network. PR agencies need to move closer their clients to the center of the network, by creating richer and more diverse connections. They also need to apply social network thinking to how they bring together their own expertise and link that to that of their clients.

&#149 Memes and blogging. The concept of memes – information and ideas that replicate and propagate from mind to mind – is a powerful and useful way of thinking about how messages flow through society. Blogging has provided us with a world in which memes can flow fluidly and freely. Media – the traditional domain of PR – is blurring into a far more complex and variegated world in which messages can flow across many dimensions.

The resulting challenges for PR agencies are to lead their clients into collaborative relationships; to connect to help their clients move to the center of the networks; and to make their clients into media participants. Media today is a participatory sport, and PR agencies can no longer act as interfaces and gatekeepers for their clients. This means they must develop and apply new skills, especially in the new participatory media. Blogging is a invaluable tool for many organizations, yet they do need help to do it effectively.

Apart from frightening a few PR agencies who recognize that they need to quickly get on top of the rapid changes in their world, it was encouraging to see the degree of energy that is going into exploiting these shifts. The only thing that remains is renaming the industry. I was asked what it should be called if public relations wasn’t appropriate. Off the top of my head I suggested “The Meme Industry”. Any better ideas?

Google moves into print advertising

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The news that Google is moving into print advertising has aroused strong interest and commentary across the web. It is buying full page advertisements in technology publications, and slicing them into smaller pieces to sell to existing advertising clients. This is the first time Google has done anything outside the Internet. However advertising accounts for 99% of its revenue, so it’s equally fair to characterize it as an advertising company as an online search engine. One of the key features of the print ads is that Google supplies its own 800 numbers for people to call in, with calls forwarded to the advertisers. In the first instance, this allows direct measurement of results, in the same way as online advertisting offers. Google clients pay for clicks from online advertisements through to their website. Receiving a phone call as a result of an ad is the offline equivalent of this. Om Malik suggests that the 800 numbers could be part of a Voice over IP play for Google, while Gary Stein of Jupiter Research sees a related move by Microsoft as leading to a “pay per call” advertising model. This relates to FreeConferenceCall‘s business model, that offers (surprise!) free conference calls, and makes money on the traffic carried on its infrastructure.

Internet advertising in 2004 rose 33% to $9.6 billion out of $358 billion of global advertising revenue. Not an enormous proportion, but enough to change how advertisers think about reaching their audiences. Google’s model – and the Internet generally – allows completely tailored targetting of advertising messages. This thinking is beginning to go beyond the online domain. How far will it go? Certainly to interactive television and interactive print. Once combined with location-based technologies, tailored advertising will start to become immersive.

Online television, video blogging, and Current TV

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The BBC has just announced that its television channels will be available on the internet. “MyBBCplayer” will initially give access to selected programs, then potentially simulcast entire BBC channels. It will also give access to selected television archives. This a significant step towards the internet becoming a true broadcast medium, though that will play out over a quite a few years yet. BBC taking this step will definitely encourage other broadcasters to consider their play in this space.

On another front, video blogging (known as vlogging) is rapidly gaining traction. There aren’t many vlogs yet, however they are growing apace as tools such as Vlog It! become available. What kicked blogs off in the first place were the early tools such as Blogger.com, that meant anyone could create their own personal web presence for free and with no technical expertise. In between the free-format vlogs and online television, you have initiatives such as former Vice President Al Gore’s new cable television network Current TV, which asks for its viewers to submit their own video content, for example on news ignored by mainstream media. The channel still acts as a filter and arbiter, however it gets its content from the community. Perhaps the biggest impact of Current TV, for now, will be to build video production talent in the community. Less than a month after launch, the jury is still out on whether it is, as it claims to be, true community television. Douglas Rushkoff believes it’s a “kind of MTV-News, without the news.”