Before that happens, I think it’s worthwhile to spend a bit of time talking about the Xbox platform, and how MSFT has really done a great job in getting this one right.  A recent article from Advertising Age pointed this out, and I am inclined to strongly agree.  And then, we can talk about implications and thoughts for marketers.

In the end, success in technology (as with most businesses) has to do with building great experiences rather than just adding bells and whistles.  New is cool, but good is better.  And MSFT made several experience-focused decisions that are paying dividends for them.

The first great experience MSFT got right was build a killer gaming system with really smart and easy social access.  The games appeal to gamers of all tastes and backgrounds, both hardcore gamers and the more casual fans.  And, to that they added the smart and easy to use Live system which allows people to play with friends or strangers, communicate with them, etc.

The second great experience MSFT got right was Kinect.  Now, Kinect is not perfect, but the first time you use it for a game, or even more, to control your Xbox experience like pausing a movie or searching for content, you get what Apple calls “magic.”  Yes, the Wii was cool, but Kinect brings the interactive experience to a whole new level.

The third great experience MSFT got right was the “all-comers” approach to content - whether games, movies, TV, etc.  Rather than taking the typical position and forging relationships with only certain content providers based on favorable rates, they instead have been pretty open in letting lots of different content providers onto the platform, and letting the consumer choose.  Imagine that.

The fourth great experience MSFT got right was the tiles/apps UI.  I know it seems like a no-brainer now, but creating an app-based environment was not an automatic at the time it was released.  Now, the Xbox has a broad but easy to navigate interface where users can find things easily, yet still spend a lot of time exploring the depth.

So, they have succeeded in building the trojan horse, where they are in the position to be the “box” and the conduit for content in the living room.  If they can continue to expand, it puts them in a very powerful position with advertisers and marketers as well.

Why?  Because the brand that can control the box in the living room attached to the TV, if they are smart (hint, hint cable companies), controls the data, which in turn means that they can control all of the content that consumers see - leading to powerful content and ad targeting and data collection.

Here is my hope for the future with Xbox as it pertains to marketing and advertising.

1. I hope that brands can think about creating experiences on the Xbox, rather than just serving ads.  My biggest concern is that brands and big media agencies are going to see the Xbox as just another place to put adds because there are eyeballs there.  While there will be some of that, my belief is that the brands who can put together killer interactive experiences will be the biggest winners.  Some brands get it, most don’t.

2. I hope that the Xbox can help to usher in the new and inevitable wave of true targeting and performance data that TV has been lacking - despite the fact that those who are TV focused claim it’s the other way around.  I continue to be amazed that the industry keeps looking backwards to reach and frequency and GRPs as the measure for media, particularly with video.  Look, people, the GRP measurement of reach and frequency is a proxy for exposure and action, not the actual measure of it.  And, guess what?  When ads are digitally served you can actually determine the REAL reach, frequency, and actions taken when viewing the ad, and make decisions from that.

3. I hope the Xbox can help to create a truly connected cross device user experience - and be able to connect the data that comes with it.  It seems to me that Apple could do it but won’t.  Maybe MSFT will.  As I mentioned in an earlier post, the holy-grail of advertising will be when all media data and subsequent traffic and sales action - online and on TV, in physical store and commerce store - can be measured and optimized together.  When that happens, we will then be able to have substantive conversations around media effectiveness and spend mix.  I can’t wait.

So, come on Xbox.  Here’s to hoping you can continue to win!

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Some posited that it’s because banner ads don’t build brands. Others said “digital scarcity” should be created because, doggone it, there are just too many ads available. Still others said that what is needed is adoption of a concept called “viewable impressions” in which advertisers only pay for ads that are seen.

The best line of the event, in my humble opinion, came from Peter Naylor of NBC Universal who “implored those in the industry to quit whining about waiting to get their ‘fair share’ of ad dollars, noting that fairness ‘doesn’t really mean anything to a marketer.”

My take-away? There is still quite a ways to go in figuring out just how to make this digital ad space work better. TV has had decades to figure out what works, so, we probably should expect that it will take some time to figure out this new medium better.

That is not to say that there isn’t a problem with the endless amount of ad inventory available or the fact advertisers should not have to pay for ads that no one sees (try that one on TV as well).  But, that’s only part of the problem.

Beyond some technical issues, there seem to me some fundamental principles that are being missed regarding marketing online, and we need to get our best and brightest on board to figure them out.

Principle #1: think experiences, not ads. Digital is about engagement and interactivity. TV ads work because, in a passive, video-based, entertainment driven environment, short entertaining and informative videos work. In digital, however, we have still not come to grips with the fact that distraction and disruption are generally annoying and not welcome. We need to think about creating great experiences and killer content worth paying attention to and engaging with. Banner ads, which are essentially billboards, have their place, but they are certainly not the only or best vehicle that digital can leverage.

Principle #2: consider the platform. We need to spend a lot more time thinking about the user experience on different devices and stop trying to jam ads onto every available space. We need to be thinking about how, when, and why consumers are using PCs, mobile phones, tablets, etc. and create the right experience for the platform and the type of experience users are engaged in.

Principle #3: give the consumer control. We spend a lot of time figuring out how to deliver ads to users at the right place and right time, and we should, but we are still mostly focused on how to manipulate data we have about users and pushing something onto them. Instead, or perhaps even more, we should be thinking about how we give users more choice and control over their data, the ads they see, the experiences they are exposed to, etc. Study after study has shown that choice works. Yet we still focus on pushing ads and content, as if we can outsmart people. Choice is one of the killer apps of digital.

Principle #4: embed social. The other killer app of digital is communication. Unlike TV, which is and probably always will be mostly one way, digital is about connecting, sharing, liking, and creating dialogue. With all of the talk about a “one to one” medium and fostering consumer conversation, we still by and large treat digital like any other communication medium, which is to say, mostly one way. Yes, there are Facebook pages and Twitter streams, but most of it still feels like ad speak and not particularly conversation building. I know it’s hard, but the best part of any experience with a company is generally found in making a real connection with a person who does a great job listening to us and meeting our needs. Digital allows us to do that, but most of the time, we don’t bother to really try.

Just some things to chew on, and certainly brighter minds will figure it out, but the lamenting of why digital is not garnering more ad dollars does ultimately come down to “what works” and we need to figure out a better model for what works in the digital space.

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So, with the growth of Android as an operating system on phones and tablets, Chrome for the web, and the introduction of Google +,combined with its massive search traffic and user information gained through its gmail product, Google is the first to be in a position to deliver on this great promise of digital: targeted content on any platform.

What does this mean? It means that Google could be in the catbird seat to provide the kind of targeting and tracking information that marketers have been waiting for, and which will significantly change the industry. We would be unwise to underestimate the effect this could have. Here is what I think it starts to change:
1) Mobile finally opens up as a more viable platform for advertisers. It’s not just its small form factor that has held mobile back. It’s the fact that the effect of advertising on mobile phones is nearly impossible to target, track and evaluate in any real way. We know people shop on phones, but we can’t tie that shopping to sales, and we have a really hard time targeting audiences on phones. Google can start to change this.
2) True attribution modeling will become more of a reality. This will actually be something that could potentially harm Google’s main revenue engine of search marketing. Google has been, in my opinion, taking advantage of less robust measuring and attribution systems for some time by generating tons of revenue on demand generated by other marketing efforts, but measured by an antiquated last click to conversion metric. This is not Google’s fault. Rather, it is the fault of marketing programs which don’t take multiple exposures and views of communications and content into account. Once we can more accurately track and measure the effect of multiple marketing communications across many channels, we can then determine the value of each interaction in a common, objective way.
3) Digitally served content will start more rapidly down the path of being in an auction based environment, and where audiences can be purchased directly. Web-based inventory has already moved down this path, but soon to follow will be TV, radio, mobile, etc. No matter how hard the industry fights against it, the inevitability of a significant change in the way media is bought is evident.

There are many more things that this potentially does, for instance raise more concerns about privacy and heat up conversations in Congress. Google and the others mentioned above could actually help from that perspective, too, by giving users more control over their data.

In the end, though, Google only starts the process. No one provider or platform will solve it completely, but they may be the tipping point to a more connected and targeted content experience for consumers and a larger opportunity for advertisers.

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I wriggled in my chair, feeling very uneasy about his comment, but decided that there would be a better time to challenge his POV. The truth is he is not alone in his thinking. I still run across many people all the time who hold that same sentiment. Those of us who work with brands who have broader views of the potential of digital know that this is not true, but we still hear it quite often.

So, we should be thrilled with the eMarketer article that came out last week proclaiming “Brand Advertising Outshines Direct Response in Digital.” Right?!?

Isn’t this the day we have been waiting for, when we can say, without seeing the doubting look from the other side of the table, that digital CAN be used for branding as well as direct response?

Well, yes, and no. The trouble is that the reason online is finally getting credit, and dollars, for branding campaigns is because of the growth of video. Not that digital video is a bad thing, and certainly not because digital video doesn’t drive branding. I am a big proponent of online video, and have seen it make a material impact on brand metrics for clients.

The reason it bugs me is because, in many people’s minds, it is considered the ONLY thing, or the primary thing, that drives branding. Why? Because, as more dollars have come online, this shift has attracted strategies that are considered sacrosanct in the traditional world from people who have a limited understanding of the potential of digital. But, this belief - that branding is best done via video - is just as troubling to me as the idea that digital should be all about direct response.

This black and white thinking must be overcome. Digital is not just about direct response. Video is not the only vehicle for influencing brand perception. Holding onto these beliefs holds back our creativity and our ability to provide complete strategies for brands which create good experiences for consumers.

And experiences is the operative word. Branding is best achieved by experiencing something. Yes, watching a video can be an experience, but it is not the only way to create an experience.

When branding online really shines is when we can create experiences for consumers that are meaningful, relevant, and interactive. And that’s hard to do.

The same goes for direct response. It’s pretty easy to measure everything by a very simple metric like cost of clicks to conversion, but it’s also pretty lazy. There is a lot more to it than that. When direct response really shines is when we can creative experiences for consumers that are meaningful, relevant, and interactive.

Most of us won’t do it, however. Because it’s just easier to hold onto our black and white thinking.

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I guess it’s this second point that has me worried.

I admit I have been a bit surprised by Facebook’s ascendance. Although it has a huge audience, the promise of brands being able to directly interact with fans made me think that Facebook would have a harder time attracting ad dollars once a brand reached a certain concentration of fans. Afterall, once a brand had a certain critical mass of fans, it should be able to reach out to them directly, in a way creating less of a need to spend advertising dollars.

But, I was wrong on a few counts. I was wrong because, despite it all, what still drives most media buying is eyeballs. Regardless of where those eyeballs are, or what we should be doing with those eyeballs, or what the return on that ad spend is, the metric of choice for most media agencies is still “how efficiently can I achieve reach and frequency?” Despite the fact that it is an outdated and mostly meaningless metric, reach and frequency still rule.

I was also wrong because brands, despite their desire to attract as many fans as possible, still don’t have a great idea of what to do with them once they get them beyond vapid attempts to generate comments. I, personally, have a grown a bit tired of brands asking questions like “Who is your favorite character from Lord of the Rings?” This was a real question posed by Amazon on January 6. Not that I don’t love the Lord of the Rings, but the question seems to me one of those examples of trying too hard to generate conversation. In a misguided attempt at humor, I responded to the question several times by naming my favorite Harry Potter character. I, of course, thought my comments were incredibly witty, particularly my choice of the “Sorting Hat” as my favorite character. No one else did. Especially not my kids who thought I was being a dork.

The failure at comedy aside, my objective was really to make the point that, despite all of the dollars being thrown at Facebook to grow fans, most of the time brands are doing very little to nurture real, meaningful, business changing, customer-centric conversations with their fans. And if the final calculus of what makes marketing on Facebook valuable is the number of fans you have or the cheap CPM you were able to negotiate, then I fear we have missed the point entirely.

What makes Facebook so valuable is that we can get authentic, honest, open comments from our customers. Instead, too many still want to treat it like every other controlled media channel - to own the message, direct the conversation, protect the brand.

Instead, we should be using the opportunity Facebook offers to our brands to listen to customers, engage them, provide service to them, etc. This takes careful planning, a well-considered strategy, and a not insignificant investment in people and time. But if brands can stop thinking of Facebook as a great media channel and instead think of it as a great customer connection channel, we might just be able to get the full value out of what it offers.

It’s just really hard to calculate that down to a CPM.

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Look, as someone who was on the receiving end of a $6 billion acquisition - when Microsoft bought our original parent company aQuantive - I can tell you without any reservation: if someone offers you $6 billion, you take it!

But, when things are going well, we all have a tendency to overestimate our own value, and basically, get greedy.

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Groupon’s downfall may indeed be its success. It helped to usher in the ever-growing boom of daily deal sites. Not that they were the first, but they were the first to really go mainstream. Now that there are so many competitors, people are starting to ask if there are just too many discounts and offers out there.

I agree that over-saturation of deals and offers can be a bad thing. But coupons, discounts, and sales are nothing new, and they are never going away.

From my perspective, the problem is not that there are too many deals out there, but that there is too little effort put into personalizing deals for consumers.

Every day, I am inundated with offers that range from restaurants to spas to car detailing to the Seattle Tug of War event. I am not joking about the last one. The problem - most of these offers I could care less about.

A client I was working with once said: “A deal for something no one wants is not a deal.” Truer words were never spoken. You can offer discounts until you are blue in the face for the latest PalmOS tablet, but if no one wants them, anything short of $0 is probably too expensive.

Now, I guarantee that representatives from Groupon or other daily deal sites will counter that deals are personalized in their service because I get offers for local restaurants and businesses. Well, that’s sort of personalized, but only on the broadest level, and not very meaningful.

And I understand that the appeal of these sites is reaching a broad, new audience, and potentially offering them something that gets them to try something they never would have otherwise. That’s a good thing - every once in a while. But even brands are beginning to question the ultimate value of offers that drive in one-time users.  (See my previous post Is Groupon Bad for Brands)

We tout personalization all the time in our business. But most of the time, what we are talking about is a massive segmentation. We put consumers into boxes based on behaviors or demographic data, and treat that like it’s something akin to 1:1.

Now I also realize that true personalization is hard to scale, and that over segmentation doesn’t often offer a return commensurate with the effort it takes. I get that. But at some level, I, as an individual, should be catered to.

The area of digital personalization that has always stuck in my craw as something that no one addresses is allowing people to make choices or volunteer their preferences. I have written about this before but I think organizations like Groupon, etc., could potentially find more interested consumers if they would tailor offerings to what people want.

This might just make them more differentiated, more relevant, and more interesting to consumers on a daily basis.  Maybe then we wouldn’t feel like we are swimming in daily deals.

And I reiterate: “A deal for something no one wants is not a deal

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Focusing on “on-the-go” tools, what I like about Michaels’ approach is that they are thinking about what kinds of things their customers want and expect from the brand. I don’t think it’s so much about “engaging with Michaels whenever and wherever they choose” as their senior director of digital marketing put it. I mean, yes, that’s true, but basically all brand apps allow for that “opportunity”, and, more importantly, that is a generic and table stakes comment that doesn’t really get at the heart of what they look to have done that is so customer-centric.

What is most intriguing to me is that they have made the most important aspects of the Michaels experience accessible via the app to enhance the in-store experience. The better quote by Anthony Price of Michaels was this: “we’ve been able to add significant depth to our in-store experience by offering mobile versions of project sheets to give customers ideas, instructions, and inspiration . . .” He also added “whenever they want it” to the end of his sentence, which again makes it seem like he forgot that the most important part was that it enhances the experience in the store specifically.

This is a very customer-centric solution.  Evidently, customers very often need project sheets to accomplish their crafts. I would imagine (not being a Michaels customer myself) that sometimes those project sheets are hard to find, are limited, are being used by others, require employee assistance to find, etc. By making the sheets available via mobile device, the customer can control the experience, and Michaels makes sure that the information they need is immediately available to them - ensuring a better in-store experience and likely increasing the likelihood of sales.

Another customer-centric approach they have taken is making coupons available on the device. Why this is so important is because it appears that customers have come to expect and rely on these coupons as a core part of the shopping experience with Michaels.  Forgot your coupon at home?  No problem!  Even better is that the coupons can be used at the point-of-sale. Now, I am not sure if the POS system is like at their stores, but if it is truly a “live” system that allows for scanning of coupons at the register, then Michaels is a bit ahead of the game. I have had several conversations with retailers whose point-of-sales systems are so inflexible that they don’t allow for coupon or other types of transactions at the register. If Michaels has gotten around that, kudos to them.

Michaels also allows customers to scan bar codes to create shopping lists via the app that can be saved and referred to later. Again, nothing ground-breaking there, but if they have also tied that data into their CRM and personalization systems so that customers can get custom offers or product information, again, Michaels is ahead of the game. For a craft retailer who relies on customer passion and inspiration, the more they can tap into the specific needs and desires of customers, the more they can leverage that into increased loyalty and sales. Surprisingly, this is something that still appears to be rarely done by most retailers, and should be a fairly simple endeavor.

So, good for Michaels for heading into the mobile marketing fray in a focused, customer-centered, and clear approach, and for know that it doesn’t have to be cutting edge to be good - it just has to be true to the brand experience and fulfill real customer needs.

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Also very interesting is a recent article in the Atlantic Monthly entitled Why Content Isn’t King. The crux of the article: “The dirty little secret of the media industry is that content aggregators, not content creators, have long been the overwhelming source of value creation. . . . The economic structure of the media business is not fundamentally different from that of business in general. The most-prevalent sources of industrial strength are the mutually reinforcing competitive advantages of scale and customer captivity. Content creation simply does not lend itself to either, while aggregation is amenable to both.”

It’s been making me think about a couple of things. Primarily, are content creators such as news organizations with editorial staffs doomed to be relegated to producing expensive content that others monetize better via distribution? Are we going to be limited to a few “super sites” where all users go?

Ben Elowitz of Wetpaint sees what is happening as the destruction of the searchable web or “document web” - in essence where the web was all about destinations with discreet content, to the social web or “connected web” where the focus of the internet is on making connections between people - ultimately our people, the people we individually want to connect to.

The announcement of Google+ today seems to indicate that Google is thinking about it. And if Google is thinking about it, then there is something there to pay attention to.

In this world, destinations don’t necessarily die. But it does mean that they become less important, a means to an end if you will. The focus on spending money to drive users to a website probably becomes much less important than finding the best way to distribute your content. And distributing that content may be a matter of simply allowing people to find and share things easily wherever they are on the web (which, is increasingly, mostly Facebook).

If aggregators are the kings, we all have to become much better at figuring out how to leverage the handful of platforms that dominate (note that the top 5 web sites garner almost 70% of all digital revenue). And be ready for those platforms to shift over time.

It also means that monetization of content has to change. Driving users to a website to consume content and serve ads may be dying. But, if distribution and aggregation are where the money is, where will content creators find revenue? We can’t all just become aggregators. And quality content is still at a premium. People need it and want it. God forbid if all of our content looks like YouTube and Facebook postings on what my cousin had for lunch today. The aggregators need good content.

Although I don’t pretend to have all of the answers, there are a few models I can see evolving.

1. Sponsorship in the distribution. Content creators will have to find ways to monetize their content as they distribute it, rather than just via their own destination. That can include ads, sponsorships, etc.
2. Subscriptions. Despite the fact that subscriptions can reduce audiences significantly, the truth is that they still produce a good amount of revenue - much more on a per reader basis than ads can. You only need a fraction of subscribers to generate the same revenue as the advertising audience.
3. Micropayments. People pay small amounts of money for all sorts of things, and my guess is that we are going to be seeing more and more of that. I can see a future where some company finds an easy and convenient way to get users to pay a few cents to read an article. Heck, if there’s a market for it, iTunes will figure it out.

Again, I am not sure how this will pan out, but one thing is for sure, somebody is going to have to figure out something, and soon. Content creators have to make money. Pure and simple. The irony is that the valuable content that aggregators distribute is dependent on great content (or, increasingly crappy content if you make big budget movies, as evidenced by the horrible movies coming out every summer).

Currently, content may not be king, but aggregation will be meaningless without good content. My guess is that this is a temporary phase until someone in content creation can figure out how to make money. Afterall, as Google+ leader Vic Gundorota says”Great content leads to great conversations.” There is no distribution without good stuff to distribute.

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Each day is like Christmas. I eagerly await the next day’s deal to see if it’s something that I should get. And I am not alone. A recent eMarketer article noted that US Internet users subscribe to three daily or weekly shopping emails or newsletters. And the majority of them read all of the messages and access them at least once a day.

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So, while I am crazy, at least I am not the only one.

But the massive growth of daily deal sites and emails brings into question just how valuable they are. There is no doubt that they bring in new customers for retailers and drive sales (Gap and Amazon had massive user response). The issue is at what cost?

A recent article from Forbes indicates that some major brands have some major reservations about daily deals. Leaders of these brands are concerned that these deals dilute brand value, attract the wrong types of users, hurt profitability, and put downward pressure on pricing.

On the other hand, it is clear that offers drive sales. In my years of working with retail brands, there is no question that the better the offer, the clearer the price point and discount, the more likely it is to drive sales.

So what is a brand to do? It seems nearly impossible to stay away from deal sites, and more and more media companies are getting in on the act - Google, Facebook, etc. Not participating opens opportunities for competitors. Participating risks diluting your brand or bringing in the wrong audience.  Deal sites are here to stay.

My take is that brands should participate, but need to do so in a way that attracts the right type of users and doesn’t frustrate their current customers. Brands should also find ways to create opportunities to reward loyal users and/or invite loyalty from the new customers they drive with these programs.

Some suggestions:

• Make the offering for something that people would not generally try or buy from you, or to create demand or interest in a new product or service, off-peak hours, etc.
• Make the offering dependent on more than one visit or on signing up for a loyalty program - create commitment from the customer, rather than making it a one time deal.  Give an extra discount or incentive to loyal customers.
• Make it an offering for something that you need to get rid of, treating it like an outlet store
• A la Barnes and Noble, make it for something relatively low cost in hopes that customers will spend more. Barnes and Noble offered $20 of value for $10. I can guarantee that most people spent more than $20.

Better yet, brands should be considering creating their own types of Groupon-like programs, and use Groupon to advertise them. Overstocks, refurbs, etc. offer brands plenty of opportunities to run their own discount services, and often separated from the core brand. Email programs, text programs, even Twitter and Facebook accounts should be used to propagate offers. Many studies have come out recently that show that customers don’t want to “talk” to brands or be friends with them. They want offers and discounts.  As brands become more savvy about what content needs to be created to drive value in owned and earned media, they will learn that promotional content will be the most read and passed along, creating the most buzz.

Yes, brands run the risk of diluting their products or services by participating in daily deal promotions, but there are only so many brands that can get away with not discounting to drive sales in a short period of time or bring in new customers. The smart ones figure out how to do so in a way that is sustainable and profitable, driving good customers and creating or reinforcing loyalty.

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Facebook recently hired Mark D’Arcy in what appears to be an effort to create better advertising experiences for brands on the network. Twitter has gotten more aggressive in creating ad products that are minimally intrusive to the Twitter stream and yet can monetize the data that they collect from tweets.

YouTube is also taking on a bold experiment - it appears to be eschewing the premium content creators like movie studios and television networks and instead focusing on content created specifically for YouTube distributed through channels on the site.

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It is doing so because, so far, the huge amount of inventory and audience YouTube has collected is proving to be challenging to monetize in large part because it is hard to make “brand safe.” There are no good ways yet for brands to really understand the content their ads will run against in the same way they can with television content.

The Wall Street Journal recently reported that YouTube is planning to spend as much as $100 million to commission low-cost content created exclusively for the Web. The article also reports that they are unwilling to spend similarly high sums for access to content from movie studios like Netflix has done. Other content options appear to be in the works as well.

It’s a bold move, and one that will be interesting to see play out over the next several years. Whether it succeeds or not really comes down to what users want when it comes to video content, and where and how they access and discover it.

Consumers have not yet quite taken to originally produced online content. My experience with branded entertainment developed for online distribution is that it can be challenging to create the audience for it. Much more successful is content that originates in broadcast or cable TV or movie studios, is heavily advertised to draw and audience, and then is distributed in digital channels.

This is not to say that entertainment created specifically for the web can’t work or won’t take off. The success of Funny or Die, for instance, is an example of what can work. However, episodic content successes are few and far between, and these are the types of content that draw in users and keep them, and more importantly, really draw in advertisers.

This point is important - advertisers like to see a consistent, reliable audience for content, and like to understand the context of programming. Episodic content offers them that opportunity more so than random short and long-form content of the type often created for the web.

There is little question that how we access video on our television monitors will change dramatically over the next several years, and this is what Google/YouTube are preparing for. The expectation is that high-def content will come through the web onto our television sets en masse relatively soon.

Google is placing big bets that users are agnostic about how they access content, and that they will be inclined to discover it in the same way that users discover information on the web - via search. I, for one, am not so sure.

In a previous post, I was pretty pessimistic that users will use a search interface on their TV’s. Not because the technology is hard to solve - putting keyboards on remotes or using mobile phones or tablet devices is already here. Instead, it just doesn’t seem to be a viable way to discover content.

Search works when people have an idea of what it is that they want and are trying to find out more information. However, when it comes to entertainment, consumers need to be able to discover content. That happens in a few ways - via advertising, via word-of-mouth, etc. But channel-surfing, a ubiquitous activity, is not predicated on the kind of searching that users do in search engines.

This, to me, is the biggest challenge for original content online, and goes back to my original point - branded entertainment online is hard to make work because people have to know about it and be aware of it to even bother to access it.  Creating “channels” for content is an interesting and probably good first step on YouTube’s part, but it doesn’t substitute for having popular content that people seek.

Movie studios spend millions upon millions of dollars to advertise their blockbusters because they know that they have to drive people to the content. TV companies spend millions of dollars running their own advertisements on their own channels. For original online content to take off, the audience for each piece of content needs to be created to attract viewers and advertisers.

I am interested to see how YouTube is planning for that aspect. Everyone in the media business is on the edge of their seats to see how this plays out.

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