Ads, digital media and the free lunch

Ads, digital media and the free lunch

We seem to be approaching a moment of truth about Internet content and how it gets paid for. Some have argued for a while that maybe the Net was not as disruptive as previously thought, and that the old school notion of advertising had turned out to be the key to commercial viability. The trouble is that notion is quietly falling apart.

There seems to be a clash of realities. It’s said that Internet advertising must be somehow effective because companies keep paying for it, and Google and Facebook have got rich on it. But I don’t know anybody who claims to have read an ad on the internet, let alone bought anything as a result.

I know full well that advertising effectiveness can’t be judged simply on immediate purchases. There’s the possibility of brand reinforcement, and long term relationship-building through reassurance. But there are other clear signs of a problem.

Martin Sorrell no less recently lashed out at Google and Facebook on behalf of advertisers for the opacity of their measurement systems. I’ve heard expert analysts elsewhere suggest that claims routinely made about the reach of internet advertising are little short of fraudulent (you can find a succinct account of some of the technical problems here .

The ad blocker blocked?

Meanwhile more and more people are using ad blockers in their browsers (up from around 18 per cent to something approaching 25 per cent).

In the UK we’re not fond of intrusive hucksterish advertising, which is why on TV many ads evolved into a form of entertainment in themselves (though necessarily irritating even then with constant repetition). Online advertisers seem to have forgotten this lesson. I’ve noticed more and more of the magazine sites I visit now protest at my use of an ad blocker because they depend on the revenue, but I’m not inclined to switch off the blocker when the ads they feature are so often intrusive and mess up my reading experience. Even if I did switch it off it’s unlikely that something which irritates me is likely to make me feel warm about the advertiser.

Similarly in France publishers are trying to put together a united front against ad blockers, denying all access unless you switch the blocker off. Here in the UK the Guardian newspaper has just done the same for some of its editorial. Commercial TV channels have taken similar steps. The trouble is that the primary effect is to make you ask yourself how much you really want to see the content. Do I really care what The Guardian thinks about Jeremy Corbyn’s performance at Prime Minister’s Question Time? Probably not.

If it’s something that matters to you you might just about put up with the advertising, not least because if you’re watching a streamed TV show you can always look at something else in another tab while the ad spews its drivel in the background. As for the newspaper titles here and in France, since the vast bulk of daily newspaper content is immediately forgettable, and there are always likely to be alternative news sources, all they are likely to do is lose “eyeballs”. It’s as though these publishers really don’t understand the hopelessness of their plight. It’s not simply that the Internet has undermined their business model. It’s underlined the easy disposability of what they offer.

Last week Opera software launched the latest preview version of its browser, with an ad blocker built in. Opera might be a niche option (though it’s long been my preferred browser) but it has consistently pioneered features that all others have followed. It claims the built-in blocker will be more efficient than plug in alternatives, and the result will be a significant boost in browsing speeds, an overt acknowledgment that ads are actively damaging the Internet experience for many people.

The end of newspapers?

Then there’s the decision by the UK’s Independent newspaper to move to a digital-only format at the end of this month, the first national newspaper in this country to do so. It’s true that the Indie’s hand has been forced by falling sales of the print edition, but this has long seemed the likely fate of all newspapers here as younger generations in particular have turned to online sources for their fix of news and comments.

Because the Indie is commercially the weakest of the UK’s titles (despite being good editorially) it’s probably not an ideal test case for the digital-only move, and it remains to be seen whether it can build a good enough circulation with the digital subscriptions to sustain the established media model of advertising and cover price revenue.

All of this underlines the reality that we are still in relatively early days, where habits and possible commercial models are very uncertain. And although journalists themselves may wring their hands over the possible cost to democracy of a diminished or even non-existent fourth estate, in truth this has become more of a theoretical than a real loss: the news media in the UK, sadly including the BBC, has become the hapless lapdog of vested Establishment and proprietorial interests. If you want a sustained critique of governments you need to look to independent blogs and web sites like Open Democracy, though it’s true that even these face the challenge of getting people to pay for content. The preferred answer seems to be ask for donations, which at least do not compromise editorial integrity, but this must be an uneasy way to build a title. Unfortunately too these sites are unlikely to have the impact on political behaviour that mainstream titles have acquired.

The rise of the platforms

Why would anyone pay for journalism, when titles are still trying to maintain an ad-funded “free” model? There’s a world of difficulty here, not least that that the commercial fruits of having global mass audiences are being largely vacuumed up by the mega-platforms, Google, Facebook, and in a different way Apple, Netflix and Spotify. The content organisers and aggregators have been harvesting most of the available advertising revenues, while the content creators struggle.

In a sense this too is nothing new: it’s just that the point of intervention in profit taking has shifted. In the last hundred years or so publishers have controlled writers’ access to the paying public, and reaped disproportionate reward. The Internet promised radical disintermediation, and theoretically it’s still available, but predictably too people have needed help in finding what they want or might value, and along the way have learned to expect most of that content for free. The “guide” platforms have become more important than the publishers, let alone the content creators.

But contrary forces have been gathering strength. Martin Sorrell has only articulated a growing concern among advertisers, and signalled what is probably the end of an uncritical honeymoon phase for social media and other digital properties.

A few things could happen now.

The big platforms are already making an offer of more advanced analytics: Google’s 360 tools (for instance) promise to simplify the maze of Big Data already available to marketers. It promises to do this by lining up a deep analysis of web behaviour with demographic data. Whether this proves to be another profit-generating smokescreen remains to be seen. It’s one of the uneasy trade-offs of the current Internet that we’re forgoing privacy for the sake of relevance. The deal is supposed to be (on both sides) that we’re only subjected to ads that could be specifically meaningful, in which case we might not mind them so much. The trouble is that there’s no sign of this promise being realised .
If advertisers remain unconvinced, and consumers irritated, there could well be serious consequences for the social media platforms.

Value, and possession

In any case things are not looking great for the media properties, unless they can persuade people to move to subscriptions. This might happen with time, but no one can imagine it’s going to be an easy transition.

The key here must be the ability to relate clear value to the point of payment, or to create a payment mechanism which softens these questions of value. This is after all how Netflix works. I’m happy to pay Netflix my six pounds a month, because it’s not much money in return for having a load of content organised for me in reliably good quality form (and free from ads). The fact that I’ve no real interest in the vast majority of titles on Netflix doesn’t matter as long there are two or three things in each month that I do want to watch. This model could work for other types of content, though I suspect the widespread habit of watching films and TV series makes it easier for people to see that they are going to get the value they’re paying for.

There may be something subtler, and ultimately more important at work too. Theoretically the Internet makes possible a closer continuing relationship between businesses and their customers. That seems attractive to marketers, and reinforces the idea that brand reputation is a critical commercial currency, but in cold reality such close relationships have so far proved too difficult (and too expensive) for most businesses to sustain, particularly when other factors have kept margins under pressure.

On the other side it’s hard not to think that consumers at a fundamental level don’t want the intrusion. In most areas the relationship has been preferably transactional: you pay some money and take away a product which you can then use without much thought for where it came from (unless it goes wrong). What we buy becomes a possession, and possessions are important to our sense of ourselves.

This may be part of the reason why there’s been a resurgence of interest in vinyl music recordings, or in craft products, and beyond these niche areas, a resurgence in sales of printed books at the expense of ebooks. I doubt it’s simply the superiority of the reading experience on paper; having a virtual library of titles that in truth depends on the continued existence of Amazon or Google seems a poor substitute for having books lying around your house. We might trade off some of this pleasure for the convenience of a tablet or Kindle, but there are limits.

Possession can’t be everything, and for other reasons we may have to adapt to some very radical ideas about shared resources (for instance with cars) but if that happens it may become all the more important that we hold on to the things we can possess, that we resist the move, attractive to many businesses, to turn products into “services”, or at least draw a clear line between which is which.

Follow the smart money

It’s still too early to say how all these different pressures and trends are going to resolve themselves. I’ve no doubt that advertising will continue to be present in our lives in many ways, though I suspect there are real and imminent limits to our tolerance of the corporate takeover of things we previously thought of in the public or personal domain. It wouldn’t be surprising to find that future digital business models will depend on service providers providing services that are genuinely valuable, allied to a payment mechanism which allows us to relate our sense of that value easily to a sensible financial figure. What matters is to work out where the real value lies, and offer it in a form that people can’t easily get elsewhere.

In this light media titles don’t just have a problem with their business model. They’ve a problem with their products too. Although the Internet has already changed the economics of production and distribution, this is an old verity that’s not going to go away.

Like decent human beings

Like decent human beings

I was in France recently, for work mostly rather than pleasure. I’ve had to speak more French in these few days than I’ve done for decades, and it’s been gratifying to feel that once surrounded by the everyday words and grammar, and forced to use it, my decayed knowledge of the language should revive itself.

All the same I still have to tune in, to focus hard on what’s being said, and in this respect, for much of the time, this week has offered some of the pleasure that any trip to a foreign country presents, the relaxation of being away from an environment where you’re sensitive to every social or culturally-inflected nuance.

This general calm envelops you, helping you switch off and enjoy yourself. It’s a calm that can also hold off the intrusions of the commercial world, which in reality are as omnipresent in France as anywhere else. I can read French well enough and know what all the signs and ads mean, but it seems so much easier to screen them out, knowing they are for the most part aimed at homegrown consumers.

Then again in France there are still many more small independent enterprises (or so it seems), and a good deal less uniformity in the town centres. The big chains are still there of course, but their impact is leavened by more individual shop fronts. (It’s a different story on the outskirts of town where the French were the European pioneers of US style mega-retail sites.)

Consistency v uniformity

I’d guess the big retail chains would argue that this obliterative uniformity in town centres is important to their brand recognition, or indeed that some people find comfort in it: you know what you’re going to get when you go into Starbucks or Costa. But I wonder (as ever) whether they’re confusing uniformity with consistency, and whether there’s now an opportunity for a more nuanced relationship between businesses and their customers.

Just to take a small example, I use Costa coffee shops quite a lot, because the coffee is reasonable, the seats comfortable, and I know I can pick up the wifi. These are all good consistencies. The uniformity of the decor is a little dispiriting, though I understand why it might be cheaper for the business. But why force the staff to wear uniforms? Why not just give them aprons (branded if necessary) and otherwise let them retain their individuality? After all these are social places, and in my local branch I’m on first name terms with many of them. That individuality can easily co-exist with the consistency you do want to preserve. Perhaps it’s time to stop trying to draw everything into the machine.

Then again it may be time for a much more profound redefinition of the place of business in society.

Rethinking corporate purpose

In the last five years or so management thinking has been pushing the importance of corporate purpose, of what business is for. The idea probably has its roots in the older notion of corporate social responsibility (CSR), but what’s most striking about it is how it sits at odds with what has become the ascendant dogma of shareholder capitalism, that the real driving force for business decisions has been the need to make large amounts of money to feed the short term demands of the financial community.

I’m not suggesting it’s wrong for businesses to want to make money. Indeed I think it’s important that they do so. Businesses are always going to be the primary engine for the redistribution of the wealth they create, through the salaries and the taxes they pay. I’d argue that in the last thirty years, and particularly the last ten, they have become dysfunctional in this respect, because the supremacy of the shareholder-led model has been diverting disproportionate amounts of money into the financial community, which is then unable or unwilling to deploy that accumulated capital to create further useful value for society. This in a nutshell is why the current phenomenon of “inequality” is so important and so dangerous.

The idea of “corporate purpose” can’t be treated on the same footing as other management concepts like brand or Total Quality Management, because it demands a circle of assent between business managers and the social or cultural views in which they must operate. It’s not just another tool to engage better employee motivation and raise productivity, though it might well do those things. It’s part of an evolution away from what has proved a destructive business model.

I’m not underestimating the difficulties here. Although there are many business leaders who already recognise that there’s a problem, getting the financial sector to change its expectations and its habits is going to be tough. It can only happen through a combination of primary legislation, fiscal manipulation (to reward long term investment) and a public debate which creates pressure for change. It will be a tough sell because it means those in the financial sector will have to accept smaller (if still rich) rewards, as will senior management. Before objectors start talking about global marketplaces and the demand for “top talent” it also needs to be said that at the moment it’s a rigged market, and that the escalation of reward is higher in the UK even than the US. It’s become a structural problem for our economy, and it has to be addressed.

Getting it right

But there are some immediate rewards for businesses that can get it right. Getting it right means thinking about corporate purpose differently. It’s not about bolting on some kind of overarching social good, to take the place of shareholder primacy; for many businesses it may be impossible to link a social good to its products, and in any case unless that social purpose is real (which means it could never be compromised for the sake of earnings) it’s always going to be vulnerable to accusations that it’s no more than a PR stunt.

But it should be possible (and necessary) for every business to think more coherently and accurately about its place in society, and what this means for its “stakeholder” relationships.

In a sense this isn’t new. It’s what CSR was supposed to be about, and indeed what the notion of “stakeholder” was supposed to push forward. But CSR was treated largely as a function, not a way of being, and that was always likely in an era where the need to meet short-term shareholder demands has been the dominant truth of corporate purpose.

What is new is a shift in consumer views of business, a cynicism and anxiety brought on by the more rapacious version of capitalism that’s come into being. It’s a cynicism that makes all the things businesses want to say about their values and commitments sound hollow. To address this cynicism I’d suggest businesses don’t need to reach for some distinctive “corporate purpose”. They need to start behaving like decent human beings.

And that’s an interesting idea.

Being human

It’s an idea with radical implications for the ways businesses talk to their customers, and to themselves (to their staff). Apart from anything else it means being unafraid of letting the real humanity in your business speak for itself (or actually, themselves). So if as is likely your business is currently exploring the tricky territory of social media, you need to let the people doing it be themselves, let them speak for themselves in their conversations (the clue is in that word “social”). That doesn’t mean they should be discussing their personal politics, but it takes us back to the coffee shop, to the important distinction between consistency and uniformity. If people speak (or write) like corporate robots, slaves to the tone-of-voice fascism of routine brand thinking, the conversation will not go far because in a social context we don’t really like talking to robots. Your representatives need to understand what it is about the business that matters, about its corporate story and its priorities, but they need to be able to tell that story in their own, human words.

It means when it comes to a town centre presence, whether in France or anywhere else, a little more modesty might be called for, because that’s an attractive human trait, and could make people warm to your business rather than seeing it as an unreflective marketing machine. So while you might reasonably want to offer instantly recognisable signage, you might do so in a way that shows greater care for, greater attention to whatever else might be going on around. The local authority in Stratford upon Avon has long imposed this constraint on businesses in its historic centre, and I doubt it’s led to any diminishing of brand recognition.

The idea of being human goes beyond the way businesses speak, or present themselves. It’s about how they think, about their aspirations, about how they expect staff to feel about their work, and how those staff themselves relate what they do at work to the values that govern the rest of their lives (one might say it’s about pulling down the artificial division between the spheres of work and everything else). Given that conceptual, behavioural shift, more effective, engaging communication should follow.

So in this sense it’s not a communications issue at all. It’s about engaging with reality.

We are at an important moment of change. As I write the UK is about to go to the polls in a general election. It’s been one of the most unengaging campaigns I can remember, at a time when the choices that need to be made could hardly matter more.

It’s been unengaging because politicians, ever behind the curve, still believe that what you say doesn’t particularly have to connect to reality, that you can win by spin, by constructing your own reality. In recent years, partly because of the internet, partly because of events, this idea which started in business has begun to unravel. In business, politics, and every other aspect of our lives, we need to reconnect what we want and do with who we really are (as humans). Then we might stand a chance of having other humans help us along the way.

Middle East carnage, business as usual?

Middle East carnage, business as usual?

Some thoughtful Jewish commentators, faced by the killing in Gaza, have reminded us of the truth that the real lesson of the Holocaust was not the fact that humans were capable of terrible evil, but that ordinary decent people could look on, and let it happen.

They are talking primarily about the people of Israel, who seem largely supportive of what’s being done in their name (though it’s hard to trust the reporting of this “fact”, a point I’ll come back to.)

In other parts of the world social networks have been buzzing with outrage (again I’ll come back to this), provoking others to argue that there must be two sides to every story, or that Hamas must bear the primary blame.

This is another kind of complicity, made all the worse by the fact that it’s actually rooted in decent if misguided impulses.

Or in another kind of evasion, decent people have said that we need to forget about history and blame, and just get on with making peace. This is the positive mirror image of a despairing argument, which suggests the region has been rife with conflict for centuries and the tensions cannot be resolved. Although this argument can have the look of being even-handed, it wilfully draws a curtain over what’s actually happened since the end of the Second World War, in the process taking its place as part of a great lie.

We cannot hope to deal with the present, cannot hope to deal with the fears, the anger, the pride and the greed driving the conflict unless we understand where all these feelings come from, even in living memory.  Nor is there likely to be a just (and therefore sustainable peace) unless the protagonists take responsibility for what each has done in the past, and in this sense blame is necessary and important.

The question of passive complicity goes deeper. In Ireland, an obvious precedent for what might be a way forward in the Middle East, ordinary decent people in the Catholic community who would have no truck with violence in their lives gave passive support to the various versions of the IRA. They did this because the memory of Britain’s bloody history in Ireland was kept alive by present injustice and state-sponsored violence, covert and overt. The IRA was the vicious mirror image of a much bigger aggressor.

For the first decades of my life the division looked as intractable as the Israeli-Palestinian conflict does now. There are still some underlying tensions in Ireland (memories don’t vanish overnight) but there is also peace. Both sides found face-saving rhetoric, and that seems a small price to pay for the fact that Martin McGuinness and (most surprising of all) Ian Paisley were able to sit down together in government, and begin to forge a better future for the whole population.

(It’s worth noting too that the countries of Western Europe have spent most of the last thousand years at war with each other, but since the end of the Second World War and the emergence of the EU such conflict already seems unthinkable.)

Apologists for Israeli aggression like to point to the fact that Hamas is a democratically-elected government in the Gaza strip, taking this as a sign of active support from the whole population for anti-Israeli violence. We need a more nuanced view. It’s true you’d have to be desperate to support the lunatics in Hamas, but the ordinary decent people in Gaza have been made desperate by the continuing aggression and intransigence of the Israelis.

This is why it matters to understand the history. It’s a bit like one of those “can you guess what it is” pictures; if you can isolate an object from its context it’s likely people won’t know what they are looking at.

So with an eye on that history, and as clear as possible a view of the present, I think it’s right to acknowledge that in its warped way Hamas is probably trying to provoke Israel into atrocity, to turn world opinion against Israel, at whatever cost to its own people; it’s hard to think of any other reason why they would continue to fire rockets that have no other effect, thanks to Israel’s “iron dome”. But the real lunacy has to be in Israel’s obliging them so fully in their murderous response. Hamas itself is not capable of turning world opinion against Israel; that’s something Israel can only do to itself.

Perhaps Netanyahu believed that the world would continue to turn the same blind eye it’s always done. He was quite right to assume that this was how western governments would respond, even to the absurd extent that the US could in one breath express “grave concern” (which is supposed to be serious in diplomatic terms) while in the next voting to top up Israel’s arsenal. The hypocrisy is breathtaking.

Netanyahu also probably felt he could rely on a complicit western media, and left to themselves they might have obliged. It’s a curious facet of so one-sided a conflict that a worthy ambition to show balance in your reporting could actually be harnessed to distort the truth. Certainly much mainstream reporting has been grotesque in its blindness, a point nailed by Jon Stewart simply by showing two TV correspondents offering “balanced” views on the violence, the one in Tel Aviv wearing an open-necked shirt, the one in Gaza City wearing a bulletproof vest.

To be fair, there have been some notable exceptions to the mainstream bias, including Jon Snow on Channel 4 here in the UK, and the reliably expert Robert Fisk in the Independent.

In any case we live in changed times, and social media quickly told a different story, with the result that western governments now seem out of step with the outrage in their populations. Whether anything will come of this remains to be seen. Foreign affairs have rarely been an issue in national elections, and it’s not as if any of the opposition parties are offering much of an alternative.

But nor are our governments quietly representing our real interests by ignoring our outrage. While it might be true that a cornered Israel would be a dangerous force, our choices are not polarised between unconditional support for Israel or the Palestinians. Indeed nobody who cared about the long term interests of Israel could possibly support its current stance or actions. Negotiation in good faith could still secure peace around a two state solution, but Israel, for historically-grounded reasons, would have to abandon what international law has always deemed its illegal claims on the territory beyond its 1967 borders. Nobody could force this change like the US, and without that change the US pre-eminently has the blood of Gaza’s children on its hands.

But nor can Europe continue to sit on its hands: that is to perpetuate the horror of the Holocaust, a horror our grandfathers fought to destroy. We cannot dishonour their memory, and nor can our representatives. We’re not talking about victory for Hamas, but for the spirit of human decency.