Editor’s Letter: The Sun Shines Through

Have you driven down Main Street lately? If your town is anything like mine, you’re seeing a lot of empty storefronts with “For Lease” signs in the window. My favorite bagel shop is gone after more than 20 years in one location. A hot new restaurant closed before I could even try it. Even a thrift store shut down after decades of service to a local charity. How bad is it when people can’t afford second-hand stuff at bargain prices?

It’s a tough time for small business people, where cash flow gets tricky when vendors pay late and customers push back on pricing. Merchants slash prices to attract customers, but that narrows their profit margins, effectively adding to the economic pressure. And despite recent upticks in economic indicators, it looks like this holiday season will be another downer for consumer spending.

All this means, of course, it’s a perfect opportunity for smart online marketers.

Online sales are rising as shoppers save gas and shoe leather by seeking out the best values on the Web. Performance marketing tools and techniques get better every single day. There are now more than 400 ad networks, ranging from tiny mom-and-pop operations to companies listed in the Inc 500. And performance marketing veterans seem more committed than ever to stomping out the ethical lapses that hurt their industry.

Now it’s up to you. Whether you’re an affiliate, network, agency or merchant, this season will test your ingenuity, business savvy, ethics, design skills and guts. If you fail to rise to the challenge, you’ll probably have an awful season. If you make the right moves, you’ll seize the opportunity and charge ahead.

Revenue Performance is here to help, with a holiday sampler for stories and columns that can help anyone on almost any level of the performance marketing industry.

First, please take note of our pull-out supplement, the Online Advertising Blue Book. The Blue Book is designed to help smart affiliates connect with the right networks. Eric Reyes, who has written many of our best feature stories in the past, edited the first issue of this new magazine for our publisher, mthink.

We’re very pleased to welcome back Senior Writer Susan Kuchinskas, who was the founding managing editor of Revenue five years ago. She’s contributed two superb stories for this issue, including our cover story, Seasonal Sunshine, which offers specific strategies for boosting clickthroughs and conversions in the current environment. Kuchinskas has also analyzed the increasingly segmented world of ad networks in her second feature for this issue, providing a much-needed map through an ever-thicker maze.

In our feature interview, media guru Clay Shirky talks about the evolution of new media, including performance advertising, from being quirky and cool to “boring” and fully integrated into our lives. You may be surprised to learn why boring is good.

Our columnists have still more ideas. Designer Pedro Sostre goes against the grain by talking about how product features must outweigh aesthetic consideration when designing in a recession. Affiliate manager Paresh Vadavia tells how to sell luxury goods when consumers are pinching pennies. Jim Lillig explains which networks will be best-positioned to avoid the inevitable shakeout. Rebecca Madigan updates what the Performance Marketing Alliance is doing to stop taxation of affiliates.

New to this issue are columnists Mike Evans, who reviews some popular mailing programs, Jay Weintraub, who opines about ethics in continuity programs, attorney David Klein, who discusses proposed regulations affecting fake blogs and articles, and Geno Prussakov, who outlines the risks when affiliates sign up for multiple networks.

We can’t do much about the economy. But we hope this issue brings a little sunshine into your holiday season. Now, if I could only figure out where to get a good bagel.

Tom Murphy, Editor

Feat of Clay

Everybody’s favorite media professor says we’re getting bored with new media. And that’s a good thing, especially if you want consumers to click on your ad.


It’s been about 15 years since the browser Mosaic unlocked the World Wide Web for millions of people. But most of them – most of us – still stumble around cyberspace wide-eyed, knowing we’re in the middle of something very cool, but not quite sure what it is or how to make the most of it.

This has happened before with new media, ever since the Chinese invented mass media in the 13th century. It took about a quarter century for “the wireless” to work its way into everyday life. TV was invented in 1926, but didn’t reach its “golden age” until the ’50s. The telephone took more than a generation to grow commonplace. In the 1980s, the first cell phones were bulky status symbols; now, almost every kid has got one.

But this time, there’s something different: interactivity. We thought we understood the Web in 1999. Then we really understood it in 2002. But seven years later, we’re still tripping over killer apps that “change everything.” In fact, there’ve been so many game-changing developments, that they’re starting to melt into the MyFaceTwitter continuum, with the next big things arriving faster, and – as media whiz Clay Shirky likes to say – getting “boring” faster, too.

And that’s the good news. The sooner the Web grows mundane, the sooner we’ll settle down into some predictable patterns that will lead to sustainable business models, and interactive advertising figures to be a big part of that. As Shirky points out in his aptly named book Here Comes Everybody, that day is drawing nigh.

Since 1993, Shirky has worked as a producer, programmer, professor, designer and consultant. He currently teaches at NYU’s graduate school. But he’s perhaps best known as a real-time chronicler of the Net’s evolution, helping to put today into perspective by looking at what it says about tomorrow.

Let’s start by talking about how new media is different from traditional media. In my book, Web Rules, I described the Web as the first mass medium controlled by the end user. You come at it a slightly different way, right?

What I’m saying is it’s the first medium that supports group communications natively. It’s also the first medium that fuses the patterns of the printing press and the phone. The printing press because you can reach large groups; the phone because you can have two-way conversations. Those two things taken together – the fact that you have a medium that natively addresses groups and, as you said, every participant has full access to the infrastructure – create a very different shape for the media landscape than what we’ve just come out of.


One of the things I’ve noticed is, it takes about 25 years for any new medium to work its way into society so that people can discover that they like it, and how they can use it. That happened with the telephone and telegraph and TV. Is that happening with the Internet?

Sure, sure. The interesting thing about the Internet is that because the core technology – the basic infrastructure of moving bits from point A to point B – is media agnostic, the Internet is really a medium for creating media. So you’ve got email, then you’ve got the Web, then you’ve got Web blogs, then you’ve got Twitter and Facebook and Flickr and yada, yada. The basics of email were baked in by the late ’90s. People were even getting bored with it, which in my view is the critical feature needed for social change. People are actually so familiar with the technology that they find it boring.

Google made the Web useable, so by 2002 or 2003, people started to take the Web for granted. Social networking is starting to be taken for granted. It happens at different places with different media, but it does seem to me to be happening faster, in part because people have gotten used to this idea that the Internet’s generative capability for new kinds of media is part of what the Internet is good at.

So, where it took email from the mid-1970s to the mid-1990s to move into any kind of public consciousness, it happened for Twitter in the space of two and a half years. We still don’t know what Twitter will look like as a mature medium. It may peak and then trough, it may get folded into something else, who knows? It still takes people time to get use to the media, but I think people’s willingness to try new stuff seems to be increasing because they’ve had enough positive experiences in the past. That seems to be new.

Rather than it being “the telephone” and then a long time later “the radio” and then a long time later “television,” now we’re in a landscape where there are new things for us to try every week if we’re early adopters, and new things get out into the public consciousness about every 24 months, which is an incredible rate for new capabilities to be offered to a media-participating public.

You’ve talked about technologies like email getting “boring.” I suspect that’s an intentional slight overstatement on your part. It’s not actually boring, but it’s so fundamental that it’s an everyday part of our lives, right?

Of course. I say boring to make a point. In part, I’m talking to myself. I spent most of my time in the ’90s, writing about “the technology,” and it took me a while to realize that technology is an enabler, but the motivations of the users are really the characteristics that make it important. So, instead of “boring,” I think really what you’d want to say is it becomes invisible in the way the telephone is invisible. We just take it for granted.

I think of it being fully integrated into our daily lives.

Right. It’s really that moment – not the original use of the tool, but the full integration – when the social change really gets weird.

Let me shift to the area of marketing and advertisement. Advertising has supported mainstream media for a really long time. With the fragmentation of media, it’s getting much harder for a lot of these sites to get along. But I think we’re starting to see some inroads in performance marketing and interactive ads. How long do you think it will take interactive advertising to become fully integrated into the consciousness of the public?


That’s an interesting question. I think it’s going to be at different rates for different media. There was an interesting example that happened in Google’s email, where Gmail was going to run ads alongside your mail. First, people freaked out about the privacy intrusion and the general skeeviness of ‘look how much they know about me.’ Then they got sort of comfortable with the algorithmic function. And then people started to find it useful. And so, in a way, the great predictor of it entering the public consciousness is either when they find it entertaining enough that they care about it as media, or when they find it useful enough to be glad to know about the opportunity.

There is some class of advertising that will simply never enter the public consciousness in a normal or happy way because the public will never like the ads. And then there’s other stuff, like Google Adwords or like Valve, a game software company that puts up these trailers on YouTube, with each trailer devoted to one character in the game. It is plainly and nakedly an advertisement for Valve software and Team Fortress, too, and at the same time, it’s quite entertaining content.

The idea of a blanket advertising environment in the interactive world that matches the blanket advertisement we had with TV ads or newspaper ads, I don’t think that’s going to happen. It’s really about figuring out which ads will be welcomed by the public.

You’ve used the example of Johnson & Johnson as a company that put up a website that wouldn’t accept comments on their products or the company, as opposed to Coca-Cola which has 3 million fans on Facebook. What do you think Coca-Cola is getting right in that equation?

The thing Coca-Cola is getting right is the thing that they’ve always gotten right since the 1970s. Whenever it became apparent that the goodwill of the Coca-Cola brand was the primary asset, they’ve understood the engagement of their customers was not something to be handled at arms-length, but something to be embraced within the core of the company. I think what Coke is getting right is, “If people like us, we have to walk into this new medium inviting those people to engage with us in ways that are more than just sending them a series of press releases.”


You talk about motivation as an important concept in terms of designing a site, or thinking about a site, or thinking about what you’re putting on the Web. That’s an interesting element when you get into advertising. What motivates a person to click on an ad?

What motivates a person to click on an ad is really not a separate question from what motivates a person to click on anything, which is they think they’ll be happier after the click than before. A link is an option, and every page that offers links essentially offers a collection of options.

You have to cross three thresholds. You have to be better than what’s currently on the page – although tab browsing makes that a little easier. You have to be better than the other alternatives on that page. And you have to be better than turning off the computer and going to do something else.

So if I’m searching for a new computer and I have a list of reviews, and I see an ad next to it for a computer that sounds like it’s going to be better or at least comparable to the ones I’m looking at – because the price is better or the features are better – that might be something that will attract my attention.

Right. The general case is that clicking the link is a better way to pursue what I’m doing, a better option for my time, than the other link I have sitting there side-by-side. But there’s a really interesting study – I think that Josh Porter up at Bokardo’s great social media blog pointed me to this – that says the single best use of social media for online retail isn’t Facebook or Twitter or MySpace or Friendfeeder or any of the rest of them, it’s having user reviews on your own site.

So I was just shopping for a netbook. I got one from HP. And one of the things I got from HP was that one of the highest-ranking search results was people discussing the pros and cons of the HP. Now, for the marketing people, there are no cons. There are no cons to any product from HP. But in fact, there are, of course, cons. What you say to yourself is, I’m not going to buy a netbook unless I know the cons and I know that they’re an acceptable tradeoff. When I saw the users’ own discussion of the HP mini was that highly rated, I bought it from HP. In that model, you’re telling me what I need to know and you’re trusting people who don’t work for your company to produce the information about that thing. That’s, I think, a big change.

We just met a woman from Brazil who works for a media company that, she said, was having a hard time understanding interactivity on the Web. And I think that’s true for a lot of mainstream media companies. I’m seeing a lot of alliances now between old media and new companies like Facebook – CNN just did a big collaboration with Facebook (see "Facing Up to Facebook", Revenue Performance, summer issue). Is that a good way for mainstream media to learn and adapt? I’m reminded of the merger of Time Warner and AOL, in a way.

I don’t think we’ll ever see anything as catastrophic as that again. That was as much market folly as learning new things about the Internet. What I will say about the CNN-Facebook kinds of linkups is that the logic has changed quite dramatically, and it’s changed because of MySpace and later Facebook, and it’s changed just in the last four or five years. In the ’90s, we all built sites and then we said, “Oh my God, how do I get traffic to come to my site?” Now the logic has shifted to “How do I go to where the people already are?”

And I think the CNN-Facebook kind of match-ups don’t have the stink of death on them the way the AOL-Time Warner deal did – in part because it’s just a business relationship, not an acquisition – but it’s a deal for the respective strengths of each of the partners if they do it right. Because going where the audience already is is now the low-cost way of getting an audience. That is such a head shift for mainstream media. The fact that they’re doing it at all suggests they have a better idea of what the landscape’s like than they did even a couple of years ago.

Most of the mainstream media isn’t doing that. They’re trying to do it themselves. The New York Times is, I think, a good example of that. And they’re doing it pretty well for a mainstream medium, but I don’t see them reaching out to leading interactive companies for a lot of help.

They’ve always been worried about that. Their model has been to buy those companies, as they did in buying About.com, because they’re not comfortable not owning what they think of as strategic assets. But in a way, once you own it, it becomes single source, and it actually drains some of the value from taking About.com as a full member of the ecosystem to saying “This is a New York Times property.” Ironically, the integration of that into corporate culture can actually damage some of what you thought you were paying for when you bought the company.

Looking down the road, we’ve seen things come and go. There was a time we thought Yahoo was unassailable, and then Google overtook it. What about Twitter? How long do you think Twitter will be in the limelight? How long will it be before it gets boring?

Twitter will not be in the limelight much longer because people have integrated it very, very fast. I remember turning on a TV in a hotel room the other day, flipping through the channels, and there was Michelle Wie, the golfer, and they were talking to her about Twitter. I thought, all right, this is the moment of ubiquity. The far side of this, people will talk about Twitter and tweets in articles, but it won’t go in the headline any more. So I think that’s probably 2010. But that, in a way, is good news for Twitter. It’s a little like when AOL had all the busy signals. People said that was terrible for AOL, but it was a sign of demand. It will be good news for Twitter, I think, because it will go into people taking it for granted.

Then they have three strategic options. They can go for enough revenue to be a stand-alone company. They can go for enough revenue to raise their acquisition price. Or they can go for enough revenue to offset their hardware costs. Those last two options are basically waiting for acquisition. The pattern of Twitter is that it works well enough that it could just stay part of the environment for a long time. But I would not be surprised to see them be acquired next year simply because they’re of such critical importance right now. It offers an alternative to the walled garden model of Facebook that is going to be attractive for companies.