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Doug Weaver on Whether the Display Ad Will Wither

From his perch in rural Vermont overlooking the Green Mountains, Doug Weaver joined us by phone to talk about the state of the advertising industry and where it’s headed. Weaver, founder and CEO of Upstream Group, is a consultant and strategist who advises publishers and ad networks such as The New York Times, Yahoo, About.com, Dow Jones, and WebMD. In Part 2 of our interview, Weaver talks about the future of advertising online.

The Makegood: Will the display ad be with us forever, or will digital publishers find new forms of advertising native to the medium?

DW: My viewpoint is based on the old adage that only a bad carpenter blames his tools. An online display ad is nothing more than a portal. It’s a portal [into a world] where lots of things can happen. Unfortunately, what we’ve chosen to do in an interactive medium is put the equivalent of a print ad into that box — with the enticement of saying we’ve showed you an ad, come and see us, and we’ll give you a longer ad — and nobody clicks on ads. You do it on Google because that’s what Google’s for. You follow the links. It’s a huge departure point.

So what we’re starting to see is giving the consumer a much more immersive, tactile, actionable kind of experience with the marketer’s message. Maybe it’s pushing a catalogue page out in the banner space through a rich media ad. Maybe I’m going to want an extended video there. Maybe make product selections or change the color of some sneakers. All this stuff is here now and will be done.

Down the road what I think we’re going to be seeing is the publisher who says it would be great if Amex would bring special content to people, and we can do that on our site with Amex as a sponsor of that kind of content experience. Or we can put that content into an ad unit, a microsite you go to, we can run it anywhere, on the exchanges. I think we will find the ad unit is nothing more than a little port key, a window that takes you from place to place. Where the revolution is going to come is what we pass through that window to the consumer. In the true experiential environments, it’s not going to seem like it’s advertising. When you look at Vogue or Vanity Fair, the advertising is part of the experience. You will find there’s a lot of creativity left to be had. All technology does is create the basic palette on which we can create.

The Makegood: Is this an approach that will work for newspapers and business publications as well as lifestyle publications, or is separating news and ads more of an issue?

DW: You ask an important question. It’s not church and state. It’s church, state, and a little bit of church and state. They’re going to live together. When you look at a web page you are looking at one screen. Advertising and editorial cohabit that same environment. Does that mean in a New York Times financial story that [Goldman Sachs] should be able to blend their story in with the New York Times story? Absolutely not. But in a lifestyle environment, you’re just talking about understanding that the editor’s role is different. It can’t be about just dreaming up the perfect story and putting it out there. That editor has to look at how can I contextualize the story in a way to make it a unique experience for the user. Part of it might be also curating other places online where they can find more of this information. I can also potentially build my content so it can be passed along.

I think the role of the editor is changing and they’re going to be thinking about how can my content be syndicated and blended so it creates value for potential sponsors. My journalism professor in college is probably turning over in his grave like he’s on a spit but we’re in a different world now.

The Makegood: Can you give an example of a publication that’s doing this well?

DW: Take the L.A. Times as an example. There was a movie out a few years ago called the Black Dahlia about a famous murder that took place in the 1940s in the zoot suit era of L.A. The Times went back into their archives and located actual coverage of that, and licensed that to the movie marketers and to the studio to create an interactive look through the archives, [so viewers could] catch up on stories as they were written and follow the case. It was all part of the ad deal. The New York Times has done similar things as well. It’s all about creativity. In a medium like this you can no longer say there’s a hole on that page, if you want your ad there, we’ll run it. Because if you do, it can be automated. If you want to compete on a premium basis, you’ve got to do more for my advertising dollar — more integration, shareability, better data — whatever it might be.

The Makegood: Are publishers going to become media, ecommerce, and technology companies, as we see happening at Amazon, Google, and eBay?

Each of the four major tech-media-commerce companies in the world today – Google, Amazon, Apple, and Facebook – are taking different paths to the same place: Each is working on creating a relatively closed ecosystem for the consumer. The fact that Google and Amazon have followed Apple into the device business – and Facebook probably soon will – says that they all want to ultimately be with you throughout every step of your life experiences, product consideration, and shopping experience — right through to the transaction. And if they can act as your bank or credit card company in the process, why wouldn’t they want to? It’s just one more poor consumer experience they’d all like to make better. Talking about diversification of businesses – I don’t see why a publisher who has a relationship with a consumer would not consider becoming a point of sale and a retailer.

The Makegood: And a technology company as well?

DW: Yeah, to some degree. The problem is it’s a talent issue. You’ve got those four companies I just mentioned, especially Facebook and Google, just sucking so much talent out of the marketplace. And the people they’re not getting who are very talented – a lot of those folks are going to startups. When [a media company] can offer somebody independence and potential wealth for taking this risk with them, then they’ll be on an equal footing. I think [the traditional media companies] will remain media companies but that the definition of what a media company does will be far more technology- and commercially enhanced.

The Makegood: What is happening with print magazines?

DW: [The leaders] still get the top rates in the magazine business. It’s still a good business, but you’re seeing other magazine publishers in the middle of the pack — they started disappearing a few years ago. I think that trend will probably continue. If someone were starting a magazine today, they’d probably be publishing on the web first and optimizing for tablets and lots of other [platforms].

The Makegood: Thanks, Doug.

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    “I think we will find the ad unit is nothing more than a little port key, a window that takes you from place to place.” That whole paragraph is well put. People’s general conception of what makes a display ad is still stuck in the dark ages: banner ads are little boxes filled with pointless and schlocky marketing content that adds no value whatsoever for the viewer. And by “people,” I mean ad and media industry people. I think a lot of the misconception stems from a lack of awareness around what is now technologically possible within display ads; content no longer needs to be restricted to fixed, “one size fits all,” broadcast-style messages (similar to TV or magazine ads, where the advertiser & publisher have only a broad demographic outline of the ad viewer, with no real-time details available for any specific viewer). Now that you can update and optimize display ad content on-the-fly based on a burgeoning array of very precise targeting techniques, each ad can be tailored in such a way that it adds the most possible value for the viewer. And if ads become more valuable for viewers, then the overall value of a given publisher website increases. So yes, there’s definitely incentive for publishers to educate advertisers, agencies, and ad networks on the myriad ways that display ads can evolve from mere print/TV ad mimicry to a medium that’s timely and relevant in ways that TV and print never have been.

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