CLOUD COMPUTING AND THE IMPACT ON THE ADVERTISING BUSINESS

If you remember the Sun Microsystems slogan "The Network is the Computer" then you'll know that there have been many attempts to move computing power away from the desktop and onto networks. This time it could work. People unhesitatingly now save photos on Flickr and Facebook, use email on gmail, and hotmail, and use word processing and spreadsheet tools from Google via a browser. All of this is free. The key difference between past efforts to make the network the computer and cloud computing, is that cloud computing is driven by an advertising-based business model. Google's announcement this week to launch Chrome OS, an operating system designed for the cloud to compete with Windows is well timed, and smart.

We already have more advertising inventory than can be sold, so the glut of new cloud computing ventures and their associated advertising inventory promises to destabilise the digital business. More inventory will drive down prices. More inventory will also drive down production costs, but increase demand for better optimisation and reporting across advertising campaigns.

Analytics will be key as new formats and new approaches emerge, die, and in some cases flourish. I also expect those who are overburdened by this inventory to start to look at new ways to raise margin by helping produce the advertising. So expect more cloud computing providers to start up creative units to help their clients produce ads.

Existing creative agencies can face this challenge by investing in teams focused on making cloud-based advertising work. That means more analysts focused on the maths and the optimization. That means more performance based pay that aligns with pay-per-click models. Notions of creativity have to change. Creativity shouldn't just mean arty and edgy, but should also broaden to mean useful and functional.

Equally creative agencies shouldn't just do communication strategy but should also do marketing strategy. Most importantly, it means recognising that the next wave of competitors are not the people you see at advertising awards shows, but are instead the geeks that live in neat streets in Silicon Valley. The music and newspaper industries were looking in the wrong direction when the revolution happened. Advertising needs to look West at California rather than towards Madison Avenue for the next challenge. This is only the beginning.

ADVERTISING AGENCIES VERSUS PR AGENCIES

Last week I did an interview with PR Week about the fact 'PR agencies have been forced to question their role in the marketing mix, after advertising firms scooped a slew of awards with PR-led campaigns at the 2009 Cannes ­Lions Advertising Festival', such as Obama for America, The Great Schlep, and The Best Job in the World.

It's become very clear to me that all agencies are suffering from what I have previously called transition trauma, and this is going to have huge implications for what the agency landscape looks like in five years time. If ad agencies can win using PR techniques, then PR agencies are going to start moving towards ad agency terrain. Fragmentation of media, social media, consumer cynicism, and digital media in general argues for a move towards earned media rather than paid media. The battlefield has moved, and everyone is shooting into the centre ground.

I've been interested in PR ever since I started writing on the social graph as I see the social graph as been centred on PR type strategies. The social graph is about passing on an idea, concept, belief, thought, project etc. that is transmitted digitally. To use the jargon we would call these memes. They propagate themselves and can move through a ‘culture’ in a manner similar to a virus. Virals are memes, as indeed are product recommendations, and chain letters. Nobody has yet fully cracked it. Not even Facebook are 100% clear how this might all work, but the answer is currently more likely to come from an advertising agency than a PR agency.

My explanation for this phenomena caused quite a storm on this blog. Its worth reading the comments and you'll see that I join the debate, as indeed did the journalist who wrote the piece. It seems it's not just the advertising industry in the midst of metaphysical angst.

METADATA AS A SOURCE OF DIGITAL ANTHROPOLOGY

One of the most interesting things I am focused on right now is how to use the metadata that is increasingly abundant on web 2.0 sites. My main focus is tags on places like Flickr, and Technorati.

This form of tagging has the rather clumsy name of a folksonomy.

A Folksonomy is a system of classification derived from the practice and method of collaboratively creating and managing tags to annotate and categorize content; this practice is also known as collaborative tagging, social classification, social indexing, and social tagging. Source: Wikipedia

These folksonomies give us a picture of the collective view, a summary of the zeitgeist, an understanding of the popular interpretation of meaning. There is personal meaning, and shared meaning. By looking at a tag such as happiness on flickr you can explore the collective meaning of the word and associated tags clustered around it.

Equally, by exploring the tag happiness on Technorati, you get an equally interesting array of associated tags, a list of the bloggers most frequently using that tag, and an understanding of the how the word is interpreted or used.

This bottom-up type of tagging is likely to be real way that the semantic web starts. Sir Tim Berners-Lee W3C is trying valiantly to get a top-down system of tagging to happen but that is currently unlikely to happen.

It's going to be a tricky affair making all of this work. Both of the images below came up from a image search on Google using the keyword "freedom"



Semantics and semiotics are complicated sciences and I am far from claiming any kind of breakthrough, but I am clear that understanding how to interpret the collective intelligence will be important. These tags are the same tags that are keywords in search engines results that pull from website metadata, blog post labels, and file names, and other sources. Coming up with clever ways of interpreting this data is going to be pretty important going forward.

THE APPS ECONOMY AND THE EVOLUTION OF MOBILE SOFTWARE

I like this piece by Kyle Bean, a young British artist. More here about him. It conveys the rapid innovation the mobile phone has undergone, and underlines the fact that miniaturization is not the next challenge any more. Nor is it about packing the phone with more hardware features, such as bigger and better cameras, or music, or screens. It's all about the software and the application, as proved by Apple and its App Store, and Google and Android.

I am a very reluctant convert to iPhone Apps, as you might read in this piece in Marketing Magazine. With such a tiny share of the market, for me creating iPhone Apps for mass market brands was akin to creating websites that only worked for Apple's Safari web browser. This is all set to change with the announcement at the WDC of a $99 iPhone.

Creating Apps is already a big business, but with an even bigger mainstream market beckoning there is going to be a wave of new apps launched into an already saturated market. Getting noticed on the App Store is tough. But like on Facebook with its Apps, the novelty wears off very quickly, and once shiny new apps are placed in the ignore-me-cemetery very quickly. My interest is in apps with utility that serve a life purpose, rather than those that are gimmicks.

The apps economy is going to be a very interesting market to study going forward, and will start to migrate from mostly a gimmick based market, to one that looks like a traditional software market. Expect to see Apps with marketing budgets that launch new versions with huge advertising campaigns and razzmatazz each year, a la Windows. All of this, however, is a huge pain for agencies, who are expected to specialise in multiple platforms, multiple categories, and have multiple skillsets, all under one roof at all times.

THE FAME FORMULA AND PROFITING FROM FAME

My friend Ray recently shared this story about PR man Mark Borkowski, who has developed a theory that says Andy Warhol was wrong to say fame lasts for fifteen minutes. Borkowski believes it lasts for 15 months and that celebrities should do something every 15 months to stay famous. He believes he has developed a fame formula and wrote a book on the topic. I'm interested in the idea as I'm increasingly interested in the PR business, and what it might teach us in digital communications.

The historical dividing walls between different types of agencies are down. With social media growing, I increasingly encounter traditional PR agencies, online PR, and blogger outreach agencies as part of my day-to-business. Social media is earned media, rather than bought media, and for an idea to go truly viral it has to borrow from the skills honed in PR. PR is built around spreading newsworthy stories. It's all earned media.

You'll remember in a recent blog post I wrote about 50 Cent and Paris Hilton and their skill in staying relevant and in the news. The importance of this for brands was confirmed for me when I recently discovered in The London Paper she earns a fortune from the personal brand she has created for herself.

The London Paper reported that "Court documents show Paris Hilton, who has a reputation as an airhead, earns a staggering $11m (£7.3m) a year. The US socialite, 28, raked in $22m in 2006 and 2007 from "promotional duties".

Brands could learn from Miss Hilton, and her amazing ability to stay in the news and to profit from it. Buying attention through paid media to stay front of mind is still important, but earning attention to stay front of mind is now a critical skill in growing revenues.

For all you big brained digital people, watch and weep as the 'talentless lady with a talent for staying in the news' interviews Lady Gaga (and gets paid to do so by Nokia). It's mostly tiresome until lady Gaga says some really interesting stuff about media culture and our obsession with fame and then talks about Hilton's fame.

WILL SELF-EXPRESSION THROUGH SOCIAL MEDIA MAKE US DUMBER?

The kid who does this video, has just become the first person to get 1m subscribers to his YouTube channel and YouTube says he is also making "tens of thousands" of dollars each month via text overlays and display ads on his YouTube channel.

The content is truly atrocious, but it does signify two things:

• One positive: It starts to establish there can be a model for commercialising user generated video (and Google will breath a big sigh of relief). This opens the door for the citizen consumer to establish platforms for self expression, and get paid doing it
• One very negative: When the consumer citizen gets his platform, the base of that platform is not usually very high off the ground. Instead its usually only one step up from the swamp, and the dumbest things are usually the most popular things. Sounds a bit like commercial television doesn't it?
  

All those revolutionaries that thought unmediated self-expression would lead to a new republic... have now got Fred.