Rick Burnes' Blog

The Irrational Exuberance of Web 2.0? Advertising.

In the bubble that is now deflating, there was both rational and irrational exuberance.

Exuberance related to the social web was rational. If you don't believe it, go to Washington on Jan. 20. Our new tools to connect are changing the way we live.

Advertising-related exuberance was irrational. Far too many companies were launched with unrealistic assumptions about the size of the online advertising market. (I was certainly an offending party.) New ad networks like AdSense made it possible to think of revenue as a constant that you plug into your product after it generates traffic.

Now two problems with that approach are clear:

1. The advertising market became oversupplied. Lots of new social networks and tools were selling undifferentiated inventory, so advertisers were able to drive the price of that inventory down.

2. Demand for advertising decreased. As inventory available to advertisers increased, its effectiveness as a marketing channel decreased. When media consumers were captive audiences, advertising worked. Now that consumers have choices, it's less effective. It's mostly irrelevant, or an interruption.

You can see these dynamics at work on both Facebook and YouTube. Facebook is still struggling to find an advertising revenue model that works. It has an enormous supply of ads, but can't charge much for them because consumers ignore them. Online video sites like YouTube have a similar problem.

There are wonderfully stupid things being done to try to solve these problems -- and wonderfully smart things -- but nothing will fully reverse the declining effectiveness of online advertising. It will persist in more relevant, targeted formats (I don't agree that it is "now dead"), but it is fading from the center of the online marketing world.

As Dave Winer puts it, advertising is just information, and there are now far more efficient ways to collect information.

Photo: tylerc on flickr

Here's What Openness Means

The flat, green line below represents devices authorized to use licensed spectrum; the purple line represents devices for unlicensed spectrum.

Via Fred Wilson:

"my partner Brad called this 'one of the best proof points that decentralized innovation trumps centralized innovation'"

And Tom Evslin:

"Note the flat line of devices being invented to use the licensed frequencies vs. the explosion of devices including WiFi, Bluetooth, and many other technologies we now take for granted in the unlicensed space.

The innovation leads not only to new devices but also very low prices and brand new services and products like WiFi hotspots and Bluetooth cars.

The need for over-the-air broadband and expanded cell service is greatest in rural areas where there also happens to be the greatest amount of unused former TV spectrum. But there is a significant amount of white space available in every market including major cities – note the 22 channels in LA. That's important because it means that devices and services designed for the white spaces will have a national market which includes urban areas.

If Horace Greeley were alive today, he'd say "Go unlicensed, young people, go unlicensed." The opportunity is priceless."

Change.gov: Released Early, Hopefully Often

Barack has already launched a transition website, Change.gov.

As Jeremiah Owyang put it on Twitter, "Our president has a blog."

What a change.

Here's what's best about Change.gov: There's a lot missing. The blog only has one post, the Share Your Story page is a lame form, the content is thin, and a lot of social features are missing.

This is a good sign -- it means the Obama team lives by the release early and often credo.

They're acting like a startup, not a lumbering 20th-century corporation. They're comfortable on the web, and they realize that it's better to have something up that gathers data and feedback than to be silent.

Bigness of Purpose

Umair Haque in Obama's Seven Lessons for Radical Innovators: Bigness of purpose is what separates 20th century and 21st century organizations: yesterday, we built huge corporations to do tiny, incremental things - tomorrow, we must build small organizations that can do tremendously massive things.

A Remarkable Talk

My fantastic colleague Ellie Mirman just posted this video of Seth Godin's talk at the Inbound Marketing Summit this fall.

I was fortunate enough to be there in person, and it was excellent. Enjoy.

One other thing: If you're not familiar with Seth and his work, check out Ellie's encyclopedic blog post.

A Good Morning

(Via Bijan Sabet and a_long)

This reminds me of a photo of Al Gore and Bill Clinton throwing a football on an airport's tarmac just before they were elected in November 1992. Wish I could find it.

LinkedIn Apps? Try LockedIn Apps.

Folks I respect are very positive about the new LinkedIn apps.

Chris Brogan says, "Run to LinkedIn and incorporate your stuff into your profile. Make sure it’s a great complement to what you’re already doing, and amp up the way you promote yourself using that service."

Pete Cashemore and the folks at Mashable put together a list of apps they want and say, "The Mashable team can’t wait to see these 5 apps coming to our LinkedIn profiles."

I don't understand the excitement.

For me, Linkedin Apps = Facebook Aps - Vampires + Your Boss.

In all seriousness, what's the difference between the two?

LinkedIn seems to be positioning its application platform as a business-ready version of the Facebook platform. Except Facebook's problem isn't business readiness. It's walled garden-ness.

When I use most Facebook apps, I have to use them inside Facebook. I have to hand over my data, then manage it within their rigid constraints.

LinkedIn is no different. In fact, it creates MORE work for me since it's one more place where I have to manage my profile.

Here's what would have been (and still would be) very useful: if LinkedIn let me get my data OUT of their site. Instead of leaving LinkedIn, I would spend more time there. I would have more incentive to put data into the system because data inside the system would have more possible functions.

If the service was robust and flexible enough, LinkedIn would become a hub of my activity. As it is, it will be a site I know mostly for its friend approval screen.

But then again, I'm pulling together thoughts quickly. Am I missing something?

What Works

Look at the things around you that are working (so many aren't).

Google. Barack Obama. Etsy.

They all have a broader goal. They're known less for their business than for the network of people around them empowered by their work.

In Seth's new book, Tribes, he explains these big goals as ideas that organize tribes (as opposed to ideas that are yelled at crowds). For Gary Vanderchuck they're evidence that you care.

However you frame them, companies need to communicate big ideas. You can't talk at your customers any more. You need to talk about something -- better yet, do something -- that excites and empowers them.

Organizing the world's information is a big idea that excites people, and free tools like Docs, mail and Reader empower people.

Change excites people, and tools to organize your community and take action empower people.

Handmade is a big idea that people embrace, and a global marketplace to sell handmade goods empowers them.

HubSpot is a younger company and our big goal is just beginning to crystallize.

We want to help create a world where marketing means inbound marketing. That means a far more efficient, authentic world where companies focus on getting found, not finding customers.

This is a vision that is far broader than HubSpot -- one that small- and medium-sized businesses everywhere share and are beginning to shape. Our job is simply to create tools and content that empower this change.

Can There Be Beauty in Business Content?

One of the open secrets of HubSpot's success is its focus on content. We create lots of blog posts, white papers, videos and webinars that filter across the internet and drive people back to our site, building our brand, our leads and our sales.

We are not alone. Businesses everywhere are beginning to create content. They're circumventing traditional media, publishing content that helps them get found.

This is an excellent development. It's a more efficient, democratic way of communicating with customers. Forget advertising, forget PR. Businesses tell their own stories now.

Yet one question knaws at me: Can there be beauty in business content?

In traditional content, beauty is excellence.

Radiohead gives beautiful live performances.  Stanley Kubrick created beautiful movies. Paul Krugman writes beautiful columns. This is the type of work musicians, film makers and columnists aspire to.

Should business content creators aspire to the same type of beauty? It's hard to imagine that with a business' pressures of time, volume and purpose it could achieve such excellence -- except that if business content doesn't aim for excellence, it is doomed to be inferior, to be bereft of beauty.

Can this be?

I think we need to change the unit of analysis.

For traditional content creators, beauty lies in the content itself. The beauty of Radiohead's live performance is in the departures from the recorded music, the excellence of execution, the scale of the work, the visual electricity and the artistry with which it's all woven together.

Whole Foods also produces beautiful content, but the beauty isn't in the content itself -- it's in the way the content reflects the company.

This video about a grass-fed beef farmer in Georgia is nice, but not amazing in and of itself. What is amazing is the way it reflects Whole Foods' business -- the fact that they support independent farmers with grants, their emphasis on locally grown food and their work to inform consumers about the origins of their food.

Whole Foods' content is beautiful becuase it authentically captures the beauty its business. That should be the ideal for business content.

Photo: Radiohead in Milan by redbanshee

A Pointillist Painting

Clive Thompson in the IHT (via @pgillin): This is the paradox of ambient awareness. Each little update — each individual bit of social information — is insignificant on its own, even supremely mundane. But taken together, over time, the little snippets coalesce into a surprisingly sophisticated portrait of your friends' and family members' lives, like thousands of dots making a pointillist painting. This was never before possible, because in the real world, no friend would bother to call you up and detail the sandwiches she was eating.