Wednesday, January 10, 2007

Growth and Opportunity at the Beauty Parlor....

"The beauty parlor is filled with sailors."

Bob Dylan penned this line for a song called, "Desolation Row."
I was running at my usual slow speed on the treadmill the other day, with my IPOD set to the shuffle setting, and this song came on.

"The beauty parlor is filled with sailors
The circus is in town."


Bob Dylan has this way of coming up with absolute ZINGERS, and one liners in almost every song he has penned, that makes you scratch your head - and wonder, "How did he come up with that?"

And then, after hearing the song literally hundreds of times in my lifetime -- (partially because the Grateful Dead did it as part of their repretoire) -- I had one of those moments of...

"I can translate this line, after all of these years into, SOMETHING THAT MAKES SENSE TO ME."

It is about the crossroads of Social Media, and Advertising.

In social media communities (sites), the beauty parlors ARE filled with sailors, in the eyes of advertisers and their agencies. It is a CIRCUS.

It is confusing.

There is a oversupply, and a glut of inventory, of available impressions --- the question is --- "HOW SHOULD ADVERTISERS BUY THIS MEDIA?"

Here are some examples (of how Advertisers) currently execute their social media buys:

* run of site -- fixed low CPM for a specific amount of impressions over time. (usually frequency capped.)

* sponsorship -- fixed placement, with a page or a hardcoded placement.

* content category -- CPM buy in a specific area, or inventory spot.

* CPA - cost per unit metric -- only paying for results. Little to no risk for the advertiser.

* 3rd party network -- Advertisers buy through a 3rd party, and dont get involved with how they get results, they allow the network to use, and make the best decisions, on how to both buy the media, and serve the impression.

"Now Ophelia, she's 'neath the window
For her I feel so afraid
On her twenty-second birthday
She already is an old maid"

Another relevant line from, Desolation Row - and herein lies the problem with Social Media and adverising -- based on Advertisers BUYING social media.

It's about the data. Just like Ophelia being old at 22 yrs -- that is the problem with much of the data being compiled today - it is based on advertisers, being treated as a "old maid."

The data needs to be FRESH, and READY to use, and most of all TRACKABLE and accountable.

Often times sites are using very siloed, or "one dimensional" horizons to look at their user data - that they miss the larger picture -- of MULTI ANGLED, AUDIENCE GROUPING -- and compiling it IMMEDIATELY, (real time) for advertisers.

Much of it involves a term called, "taxonomy." --- Or, a "simple organization of objects into groups...or audiences, for ADVERTISERS TO REACH and target consumers who have displayed a specific behavior RECENTLY.

Not 3 days ago.
Not 5 days ago.

But, where they are generating the most amount of usable, and visable DATA -- inside of that social media property IMMEDIATELY. Make it actionable.

Recency in decision making is critical.

Relevancy is essential.

We believe that Social Media publishers should be ARMING ADVERTISERS with incredible amounts of both data and choices, BECAUSE THERE HAS BEEN, AND WILL CONTINUE TO BE A OVERSUPPLY OF IMPRESSIONS for publishers who own "socialized" properties.

How should Social Media publishers confront the issue of oversupply, and under demand? (based on the low value of their media vs. other websites)

1) Create a plan to fix the issue
2) Use enhanced technology to segment inventory and members
3) share the data with agencies and advertisers
4) sell SPECIFIC profiles and inventory that advertisers desire, sell fewer impressions - but at a higher CPM
5) share MORE data
6) refine plan and test new audiences and segments for advertisers, as a benefit to working with your media.
7) educate advertisers that they can buy media in a targeted fashion inside of the social property -- while protecting the brand.

Michael Walrath from Right Media opines -----
"Display advertising has a monetization problem. So did search in 2001. When you look at it like that, it begins to look less like a problem and more like an opportunity."

He continues --- "The glut of inventory creates a new challenge for publishers of all sizes–how to sell it to marketers interested in driving responses or finding efficient reach. This explosive growth in ad impressions has not resulted in explosive growth in revenue. In other words, revenue is growing, but revenue per impression is shrinking. And if ad impressions continue to climb at anything like the rates they’re growing today, the US display ad market size prediction for 2010 ($6.2 billion) assumes that unit prices will continue to fall between now and 2010. Forecasters are assuming that inventory will continue to grow faster than revenue."

We believe that there is a small percentage of every social media property that is valuable today. It is valuable - and it needs to be identified, sold and acted upon.


Because it changes daily. It is a moving target, in social media it needs to be recalibrated almost DAILY.

Lotame helps identify both the audience members (USERS) - and the placements (INVENTORY) - that have the highest value for advertisers -- so that publishers can earn higher effective CPM's (yield) for their media.

As Jerry Garcia so aptly sang in a tune called, "Althea."

"There are things you can replace, and others you cannot.
The time has come to weigh those things.
This space is getting hot, you know this space is getting hot"

The space of social media is HOT, (according to Time Magazine) - and the facts.

Lotame is focused on RESULTS.

It is a HUGE opportunity - because after all --

"The beauty parlor is filled with sailors."

If there is NO understanding of the beauty parlor........

Rock on.


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