The China Vortex

Readers know that I have spent quite some time thinking about how the Internet and online advertising will affect the whole overall advertising industry. A recent post on Ogilvy China Digital Watch made me think more about how some of the changes the rapid rise in online advertising spending will affect the advertising industry as a whole.

The advertising industry grew at a time when the divisions and demarcations between different media and media audiences were very clear (TV, radio, print and below the line advertising). It was a good business, and permitted the ad agencies to buy large amounts of media, then resell it to their advertisers, while offering other services (creative, PR, direct mail, etc.) on top as value-added services. Advertising could be divided into brand advertising for global brands and more targeted ads for small local clients. All in all, it was a good service business with healthy margins.

That whole business model has been blown apart with the Internet, and ad agencies are adjusting to the changes. These changes are just starting, and will ripple out to affect other services as well.

The single greatest change brought by the Internet is the shortening of the business cycle. People have more things to do, which means that they need to make decisions, even important decisions, in much shorter time cycles. This means that if they want to find out something about a product/service, they want to know it in as short a time as possible.

This has been enabled by search, a business which Google has built to near-perfection. Add advertising to search results, and you have the Google money machine. Advertising appears in a welcome context instead of being disruptive.

Search advertising has had some negative effect on brand advertising because it is possible, in a very short time, to find out what others are saying about a given product or service. This is not the line from the corporation, but what other buyers are saying. More disruption of the communications process.

The immediate effect for ad agencies is that their whole time-cycle has been disrupted. Instead of the normal annual budgets and precious planning time which goes into big-budget ad campaigns, more corporate attention is going to fighting fires, which usually fall into the PR realm. The agencies are trying to protect their creative and media teams from this hyper speed development cycle in-house, but it is impossible to control what is happening on the advertising client’s side, who is getting continuously distracted by what sounds like noise and chatter.

What is the ad agency to do in order to adapt and survive?

First of all, it is necessary to tell the clients that it is no longer possible to control the message to the customers. The customers are talking back, and there is no way to tell them to shut up. A lot of the customer feedback is noise, but there are also very valuable pieces of information in there.

There is a need for a new kind of ad agency warrior who can go out there and slay the dragons , and collect the valuable information and give it back to the creative teams and client so that they can act on that information in its product and marketing cycle.

Here are my draft job requirements for an ideal candidate:

• Information researcher, able to use Internet and mobile tools to monitor client-relevant information in real-time;
• Able to engage with client at all levels (executive and manager) to understand evolving client needs, and to report in real-time on rapid changes in market situation;
• Able to understand client’s corporate position and voice, and act as a responsible spokesperson and advocate in the digital realm while upholding client’s integrity;
• Understands how to communicate to different clients on different levels and is able to quickly adjust accordingly
• Can quickly analyze and learn and communicate this information back to creative and media teams and back to client on a frequent basis;
• Proactively pushes out information to other team members and clients for their use;
• Comfortable working with amorphous teams which are changing on a constant basis;
• Is comfortable communicating in at least two human languages;

Requirements:

• More than two years’ blogging experience, including acting as an advocate for a product/service;
• Knowledge of SEO tools and terminology;
• Understanding of corporate structures and organizations and how they work, and how to get things done in them;
• Must love doing things fast and independently

Notice that I didn’t include academic credentials? I told you that we needed a new kind of ad agency warrior, didn’t I?

Technorati Tags: advertising, agencies, brand, digital, directmail, google, internet, ogilvy, PR, print, radio, search, TV

Cory Doctorow, open-source advocate and publisher of the Boingboing blog, spoke in Beijing yesterday on Sept. 12. The Boingboing blog was one of the first blogs on the Internet, and now reportedly has more than 600K subscribers. The venue for the event was the Beijing Bookworm bookclub/bookstore in Sanlitun. Many members of Beijing’s English-blogging digerati were there including Jeremy Goldkorn of danwei.org who served as host, William Moss of ImageThief and Kaiser Kuo of Ogilvy China Digital Watch.

Cory opened his talk by reading a short story he had written. The story was set in 2027, where a VC was trying to talk a woman into letting him invest 600K in her company, which created customized mobile devices from junk, which she would then sell to customers. It was a perfect case of mass customization; this time, the VC had become commoditized, he was now part of a venture capital franchise and was looking for places to put his money. Trouble was, he had more cash to invest than what he knew to do with. The woman complained saying that she had tried to get money from Sand Hill Road in 1999, but she was blown off because her business did not, as the VCs put it then, scale. Now the tables were turned, and the woman was able to buy her raw materials for very cheap prices, and taking advantage of new technology design software and equipment, was able to design unique devices very quickly. At the end of the story, the poor VC was reduced to asking if he could work a shift on her assembly line so that he could have one of the devices.

After the reading of the story, Cory proceeded to talk about the issue of DRM (digital rights management) and copyright. He related the story of how Google had recently stopped selling videos from Google Video, disabling the ability of people who had paid for downloads to watch videos they had already paid money to buy. For this reason, many had turned to the Google search engine to find unauthorized downloads of those same videos which they did not have to pay money to buy, and which they could play anytime they wanted. This was a perfect example of how screwed up the whole copyright issue had become; it encouraged unlawful behavior by punishing those who acted lawfully, but now changes forced people to adopt and use products which were not “lawful”.

He then proceeded to talk about the DMCA (Digital Millenium Copyright Act) takedown request, which was used to remove content from Internet websites. He recounted the experience of one publisher, the Science Fiction Writers Society, of which Cory is a member, which asked that all references to Isaac Asimov be removed from a document publishing website. As a result, even high school reading lists had to be removed.

All this was done without any need for proof of ownership to be submitted to a court, or seeking of an injunction. His point was that the copyright laws are much more strict on the Internet, and do not need “proof”. In a twisted way, this has encouraged the proliferation of online piracy because the laws are unreasonable and unenforceable.

He then talked about how changes in technology had helped the publishing industry as a whole. Whereas before, major book hits needed to sell 50,000 copies, now many books became profitable by selling only 3,000 books. Technology has lowered the threshold of costs and profitability for small niche publishers, which are now able to reach a wider audience through the Internet, and later through mobile search and applications.

When the US was founded, for the first hundred years of its history, the US pirated all books written by English authors, and refused to honor British copyright laws. Cory added that the American founding fathers knew what they were doing; they were not prepared to have US dollars go into the pockets of the English treasury. It was only Mark Twain, an American author, became famous, did Americans become interested in copyright laws.

Now, Cory noted, China wants to become an accepted member of WTO and the international business community, and is seeking to honor international copyright laws. He warned that it is important for China to think through what its own interests are so that the country’s own best interests are not sacrificed to globalization.

Cory made it very clear that he believes that the current copyright laws are formulated to favor current copyright owners, at the expense of consumers. He noted that the current US copyright law, introduced some thirty years ago, has gone through eleven revisions, and that literally no one, including judges, lawyers and politicians understands it completely.

If there was a theme to his discussion, it is that the Internet has opened up a whole new world for those who are savvy enough to use it intelligently, and use it to reach niche audiences and interest groups all over the world, without being restricted by geography and language.

It’s great to know that we are all tied into our own interest groups through the power of the Internet. If we are willing to reach out, we can find people with similiar interests without any restrictions at all.

It’s all in our hands now.

Andrew Lih has posted a photo of the event on his blog and Frank Yu has posted photos of the event on Flickr. Search for “cory doctorow beijing”

Updated 9/15/07: Danwei has posted a video of Cory’s talk.

Technorati Tags: Beijing, boingboing, bookworm, business, China, copyright, cory, digital, dmca, doctorow, global, google, language, management, open-source, rights, sanlitun, software, US, video, world, wto