Ross Mayfield's Weblog

Playing with Triggit

I twittered that Triggit was the coolest thing I saw at Web 2.0 Expo.  Later on, they won the Launch Pad contest.  I've been watching these guys since they started showing up a Barcamps.  They've hit upon making adding widget content and ads on a blog or site dead simple.

By doing so, they make the act of placing an ad engaging.  When everyone is a publisher, the gestures they make empower influence which is far greater than basic impressions. So bear with me for a while I experiment.  It won't show up in RSS feeds, but basically I'm learning Blinglish on my blog.

Future of Ads Matrix

In light of Google's launch of Ad Widgets, Kevin Kelly riffs on my 2004 Cost Per Influence, Sell Side Advertising and transitive advertising concepts, and then discovers this new corner.  Perhaps the future is automagically subliminal?

  Future of Ads Matrix 
  Originally uploaded by Ross Mayfield

Decoupling Decision Rights and Decentralization

Andrew McAfee has an interesting post that challenges the trend of decentralization in organizations.  Noting Tom Malone's work on how decreased communication costs enable more decentralized decision rights, he makes a distinction between information and knowledge.  You can now provide information to any potential decision maker at a low cost, but the best tacit knowledge for a given decision may reside in someone the core of an organization instead of the assumed edge.

Let’s say that a mortgage company realized that a few of its loan officers were just better at assessing credit risk than all the others. For whatever reasons (intelligence, experience, intuition, etc. ), they just had superior specific knowledge. In that situation, it would make good sense not to decentralize, but instead to centralize that decision right within the company, taking it away from the other loan officers. All the general knowledge (income statements, credit histories, etc.) would be sent to these few people, who would apply their specific knowledge to it and made decisions. In this example low information costs are still important; they allow all the general knowledge to be zipped to the few good officers. But the effect of low information costs isn’t decentralization and greater empowerment. Instead, it’s centralization of an important decision right and reduced autonomy for most loan officers.

Thought experiments like this one indicate to me that the net result of disappearing information costs won’t necessarily be decentralization. It will instead be the decoupling of information flows and decision rights. Organization designers will be able to allocate decision rights without worrying about how costly it will be to get required information to deciders. Leaders will be able to ask "Who should make this decision?" without adding "Keeping in mind that it’s going to be slow, difficult, and expensive to get them the general knowledge they’ll need."

Will this work always, or even usually, lead to more decentralized organizations? I find myself less confident than Malone that this will be the case. I agree with him that we’re at a very interesting point in the history of technology and the economics of information, but I’d label it a great decoupling (of information flow and decision rights) rather than a broad decentralization (as decision rights lateralize along with information flows).

Information has no value until it informs a decision that results in an outcome.  This is part of why it wants to be free and increasingly is.  The decider certainly plays a role in this equation.  But something concerns me about this Carr-esque classification of decision making capabilities based on tacit knowlege (what is it about theories from Harvard on expertise ;-P).  And I don't think it is enough to buck the trend of decentralization.

Decreasing communication costs and ubiquitous information begets transparency.  While the future impact of IT provides both the directions of strong crypto and transparent society, with uncharted privacy implications and policy -- I believe transparency is a greater force.  Especially when it comes to revealing bad decisions.

Lets take Andrew's mortgage company example.  First, celebrate that the organization can change structure from the decoupling of information and decision rights.  Then, note it can shift back.  If a group gains centralized decision making capabilities because of their, augmented by "general" information, it is in a good position to execute the decision making process. 

But my read of Malone's book is it is not just about decreasing communications costs that enable decentralization, but how decentralized organizations can scale.  I believe Andrew is suggesting that information systems that automate information processing enables this group to scale its capabilities.  At first glance, this is similar to how trading desks work.  But approving a mortgage for an individual is very different from institutional trading.  Markets are social and the actors in institutional trading actually rely on relationships, and by doing so improve their tacit knowledge and handle exceptions better.  By taking the social interaction out of the hands of the mortgage officer who is closer to the actual customer and in a position to assess different kinds of risks beyond the FICO score.  And perhaps worse in the long term, it dehumanizes the organization's capability to develop a relationship with the customer.

Perhaps I am being too prescriptive with the business model, and maybe sidestepped the issue by hypothesizing there is a different kind of tacit knowledge at the periphery of the organization.   But the point is some kinds of tacit knowledge and decision making capability, those best at detecting and handling exceptions to business processes, may not be scalable through automation and centralization.

What I really like about Andrew's idea is the ability to reassign decision rights because they are decoupled from information.  Good thing too, because corporations don't have deciding who is best to decide down to a science.  Given the potential transparency in an organization, we may get better at more broadly handling exceptions and learning from decisions made.  We may actually discover who influences makes decisions. But my long term belief in decentralized organization recognizes that it is the environment the organization exists within, not that inside the organization, that creates the greatest amount of exceptions.  And the organizations that put decision rights closer to exceptions are more likely to adapt and survive.

Perhaps a better structure is to encourage decoupling of decision rights

Advertising is not Democratic

I was disturbed to read a pandering post by a Google employee that decries Michael Moore's documentary Siko and offers advertising as a means for the U.S. health care industry.  Others were, and Google's official position that was no position.  Dan Farber has been following the story, and added this update:

Update 2: Now we have an explanation from Ms. Turner regarding how to read her post. She just meant to state Google’s position that “advertising is a very democratic and effective way to participate in a public dialogue.” I won’t argue with the idea of advertising as democratic. Anyone with the money or winning bid can get their message out into the ether.  But ads tend to be one-sided sales pitches without footnotes, not a public dialog. If we want a public dialog, having the two opposing sides in a public debate would be a far better way to educate the public.

I will argue with the idea of advertising as democratic.  It is the opposite.  Spending isn't speech.  Sure, U.S. health care can buy ads to be placed in context alongside public discourse.  But not everyone can.  It concerns me that the bright people at Google could be talking themselves into believing that either advertising is democracy, let alone that it helps democracy.

If the U.S. health care industry really wants to respond to Sicko, they will engage in, if not host, online communities for civic dialog.  However, most online communities these days are powered by advertising. Community hosts and ad networks have to balance against the very strong incentives to smudge context and placement until where the line between paid and unpaid content are blurred.  A balance is struck, not unlike between editorial and publishing in traditional media, but with a very big difference in that the audience has the choice to go elsewhere with a single click.  Or create their own without the influence of advertising. 

Scoble Diggs Up Cost Per Influence

Robert Scoble asks:

How could we measure audience engagement?

What he is after isn't engagement, but influence.  Here's the answer I've been trying to encourage others to implement:

• Metric: Cost Per Influence
• Format: Sell Side Advertising

In other words, we've had this conversation.

Weak Signals in Online Advertising

I'm always on the lookout for weak signals for the online advertising market, the driver for the consumer internet.  Now it looks like ad spending failed to meet expectations this year and social media is creating an inventory glut. 

I wonder if Google's market share vertical integration strategy will structurally impact the market.  Some see this consolidation as a sign of strength, but it could be a longer term weakness. At the least, there is a short term driver for M&A for erstwhile competitors. The sponsorship segment of the market seems to be doing well and supporting the proliferation of micro-pubs and there is lots of room to innovate.  As long as people keep buying.

Feedburner Ad Network

I'm going to experiment with splicing ads in my RSS feed.  I've joined Explore Social Media (a FeedBurner Network).

If any subscribers object to this, please let me know in comments and it will weight heavy in my decision.  I'm really just playing here, not trying to make money. 

Sponsoring Techmeme

I was too busy to blog this yesterday, but Socialtext became one of the first sponsors of Techmeme's new ad format and it might be helpful to share the rationale. What is appealing about the format itself is the ability to control the content yourself, simply make a new blog post. From an advertiser's perspective, this is pretty revolutionary. Zero-barrier to campaign adaption, in the conversational format we are already communicating in and where campaign is in conversational context.

Now, I'm not really doing this right, and truly adapting the ad to the context of what is being discussed. If there were memes to directly play off of, and quite frankly we weren't so busy incorporating feedback on Socialtext 2.0 and the close of a great quarter, I'd be playing a different game. I had confidence in this ad buy, a rare thing for our company, because of who we were sponsoring and influence.

Gabe is a good guy, and sponsorship is the last remaining ad format yet to be commoditized, largely by Google. Last time I looked, sponsorship was 10% of online ad revenue. You may know my interest in Cost-Per-Influence and Sell-Side Advertising, which I believe is the future of online advertising. The buy started with Gabe reaching out to me, a gesture that meant he sought affiliation with our brand. I gauged the relative influence (not how many impressions, but who was impressed and whether those would impress others) of Techmeme in my decision. If Techmeme writers as readers could cross-post my ad (in a way they did, by blogging about the news of the format, but that isn't supporting a Socialtext meme) -- it would be the same dynamic as sell-side advertising.

It is early in the experience, and there is something to learn here, something else.

Erick Schonfeld pointed out that companies that really blog, like mine, could get on to Techmeme through meme merit. As it should be (btw, any Socialtext employee can post to this blog with only general good sense guidelines, so someone could commandeer the ad, within reason). The editorial and publishing sides of the house should take such sides, even if driven by an algorithm. After all, why else would users be there?

Let's explore that question. With me prodding Gabe like I have before (and without backchanneling).

I'd love to see the Techmeme ad format evolve towards its editorial content. Towards as in format, not as in business rules. Maybe keep the auction for 1st, 2nd and 3rd place -- but show the conversations linking to each ad post.

Scary thought, eh? The question is how that would effect the ad price. Would enabling ads in context of conversations scare off ad buyers? Only those oblivious to how little control they have over the message in the first place. For others, it may be more attractive. If an advertiser had confidence they could snowball positive conversations with their ad, buying an ad could amplify the effect. After all, broadcast casts what you want to be, networks amplify who you are.

Now what if the way advertisers were gaming the system, in a system of highly nested feedback loops, by creating great content as advertising to attract and influence others? Perhaps Gabe would run a whole page driven by advertisers they selected. Perhaps readers would find it as compelling an index as the one driven more by merit. The single criteria for fulfilling Sell Side Advertising is a system that is driven by incentives to create better ad content. And for that, I think we would all be better off.

Buy Side Publishing, An Open Model

Allow me to further simplify the Buy Side Publishing model. The most efficient part of the content business isn't in how or what they produce, nor how they distributed it, but how they make money.  Today the embraced commoditization is in advertising, with standardized metrics such as CPM.  But this makes money through directed attention, not directly from content.  To that, with the balance between freedom and profit motive required in a modern business model, you simply:

1. Apply CPM, and other standardized metrics developed for advertising, to content
2. Build upon the Creative Commons framework to ensure reuse without DRM under such commercial terms

This fills in the grey area between Commercial and Non-Commercial, or rather, let's you define Commercial use along with terms.  Maybe this is an over simplification, but picture this content universe...

1. But picture this post with a discoverable watermark that bakes in these two terms, with a CPM of $10 communicated to the clearinghouse each time the invisible .gif is impressed.  Say you read it and like it, fair reader and writer, and decide to republish it on your site. 
2. Someone else grabs it from my blogs and remixes it into a commercially minded remix.
3. Now picture someone finds it on your site, and thinks it would be a perfect complement to a Sell Side Advertising ad that is starting to take hold as a meme. 
4. Suddenly, as a publisher, I make money from all three transactions without the one-off transaction costs that plauge old notions of syndication.

I happen to think this is a model that not only unlocks value, but discovers it.

Jeff Jarvis comments:

But Ross, you assume that anyone would pay for content when they can link to it. Not sure that's a valid assumption. What am I missing?

Commercially viable remix use cases.

For example, search and aggregation are limited to fair use cases today.  Google scrapes and indexes an entire page, but only presents a link and summary on their own site.  What business models could they come up with going beyond fair use?  Or take more traditional media and their reliance on newswires as fodder.  What if they could efficiently syndicate diverse content sourced online into print?  Or from the initial publisher perspective, is there content you want to offer openly for non-commercial reuse, but also not restrict commercial use so long as you get paid?

GM Does Open Source Ads

A long time ago we had some theories about where advertising was going.  Jeff Jarvis had a notion of open source ads.  Well, it's all happening.

GM launched Chevy Apprentice:

Contestants are given a variety of images to work with and are given the ability to splice together the visual elements over which they can display their own advertising copy. A contest of this sort doesn't come without risks. As we expected, people who are opposed to SUVs for a variety of reasons quickly discovered that they were also welcome to participate.

Early on we made the decision that if we were to hold this contest, in which we invite anyone to create an ad, in an open forum, that we would be summarily destroyed in the blogosphere if we censored the ads based on their viewpoint. So, we adopted a position of openness and transparency, and decided that we would welcome the debate. (As an aside, we have been truly disappointed by the number of submissions we had to filter out because of their vulgar content.) I won't bore you with the details, but the overwhelming majority of the 22,000 submissions thus far have been earnest attempts at creating positive advertisements.

Was the risk worth it?  Yes.  The worst case scenario is people remixed the brand in the way they already related to it.  A set of already known truths, and if they weren't known, the brand manager wasn't doing their job.  Besides, such remix happens with or without the participation of the vendor.  At least this way they are part of the conversation.

Charlene Li:

While some people point to this campaign as an example of the failure of viral marketing and social computing, I think it points to a great success. Our definition of social computing is when technology results in power shifting from institutions (like Chevy) to communities (like customers). By losing that control over the brand experience, Chevy actually brought more people into it -- witness the debate over the campaign itself. The environmental and SUV fuel economy debate has always existed outside of the Chevy experience, but by bringing it into chevyapprentice.com, Chevy has harnessed it into a promotional benefit.

The point of this remix isn't the outcome, although I'll wager there will be some great creative, but how the process fulfills the ultimate advertising metric -- engagement.  The constructive intelligence phase of the experiment, next is collective intelligence.