Jim Spanfeller on TV, Wireless, Elevation & More
By Wendy McHale, Publisher
As President and CEO of Forbes.com and Chairman of the IAB, Jim Spanfeller has a unique purview in this industry. It's been a year or so since we last chatted about what's happening on Madison Avenue. There have been startling changes during this time, so I had a long list of topics I wanted to discuss:
Wendy: How's it going?
Jim: It's going very well!
Wendy: I know you're incredibly busy.
Jim: I heard someone say recently that they feel like they're meeting themselves in the doorway of their office. It's still very much an adrenaline rush!
Wendy: I have a lot of things I hope we can cover!
Jim: Like what?
Wendy: TV, Wireless, new products, streaming, social media, the IAB, industry trends.
Jim: Let's get to it!
Wendy: Great. Let's begin with TV. The way we see it, television gets an "A" for effort in terms of putting together integrated packages this year. They're now leveraging their content better both online and offline. What's your opinion?
Jim: Broadcasters are where magazines were a few years ago. Most of the television offerings I've seen aren't really all that big relative to their offline size. The television business is pushing the web to support their offline sales. That's very different from companies like Forbes and some others who migrated to the web some time back. We established stand-alone businesses separate from our offline products. Our business comes from both brands when it makes sense for the client. Otherwise, we work independent of each other. TV still has a ways to go in this area.
Wendy: How about TV on the net? Are viewers now used to pre-roll?
Jim: Definitely. We've never seen much pushback with our audience, though that's due to their sophistication. They're used to getting content free. They get the quid pro quo that it's due to ad support.
Wendy: Last year Forbes.com made a major investment in video. How is it doing?
Jim: We're up between 300to 400% in terms of the number of streams, year over year. The homepage has a video now.
Wendy: How does that compare to the competition?
Jim: ESPN has done a lot with videos as you would expect, and that's a site we pay careful attention to.
Wendy: What's new?
Jim: Here's what's new. Right now we're expanding in several areas simultaneously. First is internationally in Europe and Asia. The second is what I call our "verticalization" of content that's industry specific. Social Media is one of our uber-initiatives and we're finding new ways for our editors and users to communicate more closely and on a more personalized level. For instance, we launched a service from Clipmarks that allows our editors to clip Web content, post it on FDC and begin a dialog with users. It's kind of like the reverse of del.icio.us or Digg. We also launched Forbes Widgets with Visa as the sponsor, which is pretty ground-breaking as folks are still playing with the idea of monetizing widgets.
Wendy: That's interesting.
Jim: Another major factor in 2007 has been with our strategic partnership with Elevation Partners. They live and breathe what's going on in Silicon Valley. They have their ear to the ground. They're very plugged in. This gives us a major advantage.
Jim: They're in touch with what's in the interactive media pipeline long before it reaches the New York Media side of the business. I'm blown away every time I come back from being out there and spending time with them.
Wendy: Can you give us some idea?
Jim; Actually I can't! Okay... I'll give you one example; our investment in Investopedia. While it's not huge, it's a nice business and we think it can be a big business which will fit in nicely to the suite of products we have now.
Wendy: How important is research to your new product rollouts?
Jim: It has its place. We survey our audience frequently. We do customer satisfaction studies everyday. We look at them top line once a week and then on a more detailed monthly and quarterly basis.
Wendy: That's a lot of data.
Jim: It is. That said, it's only directional. Take a look at focus groups. If you ask 100 people what they want, you'll most likely get 80 who say they want X and Y. Then you give it to them and they say, "No that's not really what I wanted!"
Jim: Conversely in the same focus group they may look at something new and say, "Oh, it's not that interesting". But when they actually use it and it comes to life, their reaction is quite different. We hear "Oh, my goodness that's fantastic."
Wendy: Let's talk about wireless. There's lots of buzz right now. I for one feel very bullish about it.
Jim: I agree. This is something near and dear to my heart. We've been serving our mobile customers for years now. We were one of the first. But there are too many unsolved issues that are handicapping its growth as a media platform.
Wendy: Such as?
Jim: Well, you have a variety of carriers to deal with. Much of the mobile data used will be from the web and may be different depending on the individual networks of the carriers. The issue everyone is going to have to face is how advertisers are going to benefit from it. Right now there's lots of interest but fare more amounts of learning ahead of mobile, before it becomes a standard part of the media mix.
Wendy: I never thought of it like that.
Jim: There's no question that everyone is going to have a mobile solution. And when that happens it won't be really very different from the web in general. It's just a smaller screen. I think the Apple i-phone is a major step forward, but it's still too early to see how it's going to impact the market. Everyone now is figuring out how they're going to beat it.
Jim: That's just the delivery systems elements. Let' talk about how advertisers are going to make their messages relevant. When you travel overseas now, the first thing you see when you enter the country is a text message from the carrier telling you to buy something!! That's "definitely" the wrong time to hit people with an ad. (Laughing)
Wendy: No doubt!
Jim: In this country there will be a level in which people will revolt. If you're going to get a text messages everything 13 feet when you're walking down the street, you're going to say, "Enough." If there's ability for people to opt-in to those messages around specific things, that's fine. The consumer's going to drive what they'll expect from their mobile device. It's the most personal media vehicle there is. And it offers the most ability to personalize. For example, let's say I don't care about clothes, I care about coffee. That's what I'll allow carriers to send me.
Jim: The addressability of mobile is an incredible leap forward for the advertising dynamic. It raises two issues that are opportunities and hurdles.
Wendy: You've obviously very excited about it.
Jim: I am. These are two undertones that have semi-immediate ramifications. The first is to get advertisers to consider the reality that new media has become the primary medium in many people's lives. There's a tremendous imbalance of usage versus ad spend. That's old news.
Jim: The other involves the creative; the messaging. The cost of producing creative is going to have to change. Plus, its addressability. Look at the person who created the Doritos commercial for the SuperBowl. It cost $300.00. AdAge called it the 3rd best commercial in the SuperBowl. Look at how consumer generated advertising is taking off. It's moving very quickly, much faster than many agencies would like. It's not like the Blair Witch project of a couple of years ago. You know what I mean. The camera was hand held, it was grainy; it intentionally felt like an Indy film and that was part of the reason why it worked. But in the case of the Doritos commercial, if you weren't told that was produced by an amateur, you would have thought, "Hey that's a pretty good commercial."
Wendy: I loved it!
Jim: It worked and yet it didn't require production costs that included flying Tahiti for the TV shoot and hiring a band-name director. That's going to have a huge impact on how the agency business operates. Combine that with the idea of addressability. The business is going to have to figure out how to have creative executions on a variety of levels. An execution for people with red hair who are looking for travel information, or people with blonde hair interested financial services, etc... or people who are in manufacturing or banking or whatever.
Wendy: It's going to be very complicated initially.
Jim: Yes. Instead of 3 or 4 executions of a marketing statement, you're going to need 30, 40 or 100, and the ability for a client to fund all each of these is going to add up to 1 or two TV commercials. The question then becomes how does the agency get into the space where they can still make money and be of value to the business and also turn out 75 executions of a commercial at a cost structure that a client can tolerate?
Wendy: We'll see! Let's switch gears and talk about the other hat you wear as Chairman of the IAB. You have a new leader at the helm, with Greg leaving and Randall coming aboard.
Jim: Well, Randy's great and so was Greg. I think they're both the right person at the right time. Greg started a lot of initiatives which are actively being pursued, such as bringing all the different sides of the buying process together around things like "What's an impression? What's a video impression? How do we measure a site's audience size? How we deal with reach and frequency with local mediums. There are many more. Moving forward, Randy is now leading the organization to be more involved in Washington. The IAB board had it first meeting in our Washington, DC office. So far, so good.
Wendy: Good. Now that the dust has settled to some degree, what do you think about the recent wave of acquisitions? Google buying Double Click. Microsoft buying eQuantive. AOL buying Tacoda.
Jim: It's funny. I heard somebody along the way, I don't remember who, predict that all of the ad agency holding companies would either buy or start their own ad serving companies. And they'll offer that as part of their solution to their clients. From the agency community they can't afford not to do it because you may somehow get blown out of the equation.
Wendy: Does it seem like 20 years ago when all of the little agencies started getting swallowed up with big holding companies?
Jim: Well I guess it's somewhat analogous but I think there are other issues that are additive to that process. The idea of someone having all the data is the holy grail that Google, MSN and to some extent Yahoo are chasing. The likelihood that anyone will let someone have all their data is highly suspect. These acquisitions are all being made based on the fact that these companies see life as a purely as a cost per action future.
Jim: But the need for branding is equally or more important. They're all in the middle of this vortex. Scale continues to be a very important factor. Scale on the level of a Yahoo with 480 million uniques, but vertically as well. Sites like ours are winning in this environment.
Jim: We just talked about the IAB. The IAB is going to be in a tough situation and so is the OPA based on these mergers since its members will have different vantage points and will need different ways of looking at the business within these organizations. You'll have companies like Google and Yahoo on one side of the spectrum and somebody else on the other side of the spectrum.
Wendy It just seems like more growing pains.
Jim: It will be painful but at the end of the day we'll be in a better place.
Wendy: What's been the most exciting thing you've done so far this year.
Jim: Gee, it's hard to point to just one. There's a variety of things that makes this company so interesting. I have the opportunity to be involved with a wide variety of initiatives all of which are best of class.
Wendy: I'll tell you one of my favorites. I personally got a kick out of the video coverage of the St Jude Hospital Benefit in June with the cast of the Sopranos on board the Highlander. It was something that I would have expected on an entertainment site except for the fact that it dovetailed with the Forbes Celebrity 100 issue!
Jim: In the case of the celebrity element that's a once-a year event.
Jim: Now that I think about it, I think the international expansion, the social media, our adding even more programming to our video product all add up to listening to what the marketplace needs. Here's something. Let's talk about real estate and lifestyle. Those are definitely within our domain. One video that did extremely well was the one where we did a tour of the most expensive home in the world that was up for sale at that moment. It was an estate about 40 miles outside of London which was on sale for $150 million. It had 3 outdoor pools and 3 indoor pools, one of which was in the master suite. If you search on "most expensive home" on the video channel, you can get a peek at it. It's really over the top. That got picked up almost everywhere.
Wendy: I love it!
Jim: Our business content gets big play too, Stephen Covey interviewing CEO's of major companies, Robert Lenzner doing Street talk, Michael Ozanian doing Sports Money. They have a following that's growing. There are a lot of irons in the fire. What we're trying to do is expand the amount of output we have on a per day per week basis and to have that output sort of cover the broad waterfront of what we are about. The Forbes brand covers everything from hard core business, to personal finance to corporate finance. It all surrounds coverage of this affluent lifestyle.
Wendy: That's a lot to manage.
Jim: But it's fun, which is what makes it all worth it. However, with all these initiatives, one of the things that has been most startling to me personally and satisfying as we've grown is that our overall quality of the audience has not been diluted at all. It's a testament to the Forbes brand and the people who run the company that makes it so self selecting.
Wendy: Thanks, Jim! This was great!
Jim: It was my pleasure, Wendy!