Summary of Building Blocks Conference, San Jose CA.

Making digital media more convenient for advertisers so they can allocate more money to it from traditional media budgets. That’s my vote for the central theme of The Digital Hollywood Building Blocks conference in San Jose held last week from August 5-7. 4 tracks of 56 panels featured over 250 speakers with 25 sponsors and exhibitors. Attendance was brisk the first two days with plenty of interesting executives, entrepreneurs and technologists to network with at every opportunity. I participated in one of the last panels: “Contextual Media, Search, Ad Serving Networks and Advertising Applications in Broadband and Mobile”. A topic broad enough to warrant a conference of its own, yet it made for an interesting session with Dr. David Saad, CEO of Clupedia moderating.

From the non-stop talkstreams about clickstreams and lifestreams I did manage to glean some personal relevancy to my vocational context.

Firstly, it is becoming clear that the single most important revenue source for Internet and mobile media, behind burning through investor cash, is selling advertising. Ad Networks inventory it, and advertising technology companies seek to wedge their way into the sale for a slice of the buy. All this while audiences get better at avoiding advertising messages of all kinds, especially 30 second commercial spots by ad-skipping, or by simply turning their attention to another screen. David Tice, VP at Knowledge Networks SRI highlighted research demonstrated that only 30% of viewers stick around to attend to pre-rolls.

Not to say that downloading and subscriptions services are nill, they are just nowhere near the business model solution that will lift the digital media industry and rescue traditional media from declining sales and rampant piracy. Rhapsody, Napster and the like remain publicly optimistic. I personally believe that bundling media services with other utilities will prevail.

Much of the talk, especially on the Television 2.0 track, attempted to address what to do about video advertising. Pre-roll, mid-roll, and post roll are generally considered problematic. Overlays and “attached” ads, less intrusive. Some studies say that as much as 92% of Americans watch less TV due to competition form other media including so-called “over-the-top” programming, AKA Video over the Internet. Other studies say that TV viewing is still up, but what about attention and engagement?

TV still commands the lions share of advertising dollars, over $65 billion overall in the USA. Larry Gerbrandt of Media Valuation Partners points out, using Nielsen data, that Youtube comprises only 1% of all video-viewing minutes, mobile a fraction of a percent, TV over 98%. Larry pointed out that although Internet video viewing is still a sliver, ubiquitous broadband availability would be the game changer. Other thought that the game has already changed, the advertising dollars are just lagging behind.

Larry, with Seth Shapiro of New Amsterdam Media and James C. Roberts of the Global Capital Group, presented the MVP session on media valuation, which was especially informative delving into the hard-core fundamentals of what makes content worth what. Turns out it is much harder prove the intrinsic value of media content than I thought. You have to prove revenues, you have to have a “locomotive” that can drive audience, you have to have clear intellectual property rights which, as pointed out by Mr. Roberts, is often difficult to discern, especially in the EU. If the program has legs, if it comes with adequate indemnifications also all come into play.

Cynthia Francis, CEO of Reality Digital (A hosted service platform
for storing, sharing, managing and monetizing user-generated content
including video, photos, games, text and more) pointed out that in spite of the fact that TV still dominates the Advertising landscape, niche video driven networks are working citing the examples of cardomain.com, hook.tv, newbaby.com. She assets that we are at an “inflection point” similar to when brand websites became necessary, is upon us whereby consumers are no longer willing to be “told” what to like or want. They want to be “engaged differently”. In that same session General Partner in Caanan Partners, a VC firm, failed to clarify what social media strategies would attract new investment.

There is no end to the ingenuity being applied to replace, bolster, or otherwise modify the TV commercial for targeted, contextual, less intrusive, Internet delivery. On the “Bridging TV and Broadband” Panel, Daniel Leon, Head of Strategic Partnerships for Hiro Media emphasized the roll of “Legal” P2P. Hiro inserts a “positive DRM”, “mid-roll” advert into a video for advertiser support P2P delivery. Akin to what Spiral Frog and a few others are trying in the music space. A small piece of a very large puzzle which I doubt will thrive on its own but only as part of a much larger solution for flummoxed advertisers.

Although retrospectively obvious, a common thread that ran implicitly throughout, was that all forms of advertising affect all others. Amid constant cravings for more, better and different metrics, is the almost impossible to isolate multi-variant reality of the complex interplay between all media. Media and advertising converge on a persons psyche as a whole, and whether I finally click on the Gieco banner or watch their video, or call their customer service center in Bangalore, could just as well be attributed to another annoying 30 second Lizard TV spot as to the immediacy of the carefully measured, behaviorally targeted, lower-third overlay on a 15 second pre-roll. My co-panelist Kevin Lee, Executive Chairman of the fabulously successful Didit, explained that offline advertising very often drives people to search for particular terms or phrases. Remember the lawsuit, Geico Vs Google, complaining that Google could not piggyback paid search on the back of a trademark?

Although a common term of art for ad biz folks, I first learned the term “Brandlift” in the Video advertising panel. As you might expect there are plenty of market researchers keeping busy measuring this, although I would be very skeptical on their ability to attribute brand affinity and intent-to-purchase to any one campaign or methodology. In any case almost every panel mentioned “Metrics” more than once as the way to get more ad dollars into their Internet or mobile media business. I learned that the industry is awash in metrics. What is lacking is the holistic analysis and interpretation of the data, and the ability of advertisers to make strategic shifts. Many speakers agreed that it is just a matter of time until, as one panelist noted, there is the “Monsterization” of TV advertising. Referring to the way Monster.com almost overnight undermined the job classified business. The now shrinking $65 billion TV advertising industry will dramatically begin to reallocate those dollars. Many believe that the future will be much more akin to the Direct Response advertising business whereby “pull”, opt-in, requests, search and the like become the norm.

There was much talk of contextual advertising based on profile data are so called “Datastream” marketing. Behavioral Targeting is also a controversial technology, which follows a user to every site they visit and makes inferences based on those actions. Privacy concerns were recognized but it was generally thought that they would not stop the imminent and allegedly anonymous, use of such data.

Broadband and The Social Media Platform Track highlighted the importance of MySpace, Bebo, Hi5 and others. Brett Wilson, CEO of Tubemogul hyped his sites ability to allow creators to “syndicate” to multiple tube sites concurrently while aggregating viewing data form multiple tubesites for advertisers, this making it easier for content creators, and by implication their sponsors and advertisers, to measure their reach. New and promising uses of the social media nets are popping up. For example now Facebook allows companies and organizations to have pages as well as Bebo, which has been successful with commanding hefty sums for sponsored episodics on its site, namely Kate Modern and Sam King. These programs achieve a high degree of “turbo” brand integration, which was the subject of another panel.

Brand Integration is supercharging the art of product placement. Funny thing, both Radio and TV advertising began that way. The Colgate Comedy Hour complete with skits featuring the product, Hotpoint sponsoring Ozzie and Harriet in their perfect modern suburban household, the Texaco Comedy Hour, The Hallmark Hall of Fame etc. In addition to the above examples, there were several others. The examples Bebo examples above are joined by a myriad of other attempts to elevate advertising to the level of content. i.e. advertainment. Jordan Mauriello, is Founder and Creative Director of moreYellow , an agency that specializes in “Integrated Brand Engineering”. He showed off his www.facesofoolong.com site built for Konami Mobile which is an advergame that gets prospects involved in the brand via an amusing game. Sphere: Related Content