Back to the Future

When we coined the term "infocommerce" way back in 1999, it was meant to express our belief that information content needed to be linked with software and become increasingly integrated into the business processes of our customers. This would go far beyond assuring high renewal rates. It would drive customer demand for better and deeper data, for which publishers would be able to charge premium prices, with all this data now integral to the basic operation of client companies. We saw this as a very attractive vision of the future, but at the time it really was in the realm of theory.

Over the past few years, we've seen these precepts of infocommerce become part of mainstream thinking in the industry, with more and more publishers talking about delivering high value data as continuous data feeds, and finding ways to embed themselves into the workflow, systems and processes of their customers. But while more of us are "talking the talk," still only a handful of us are "walking the walk."

That's why it is so nice to hear a top executive at leading company demonstrating that they not only see the future, but are making serious strides to re-position their companies accordingly. Nancy McKinstry, chairman of Wolter Kluwer's executive board, told the audience at the recent DeSilva & Phillips conference that it was the goal of Wolters Kluwer to move beyond providing their customers with information to read in favor of finding ways to "embed our content in what our customers do." And in a dramatic illustration of their commitment to this goal, McKinstry noted that the company now devotes as much effort to creating software as it does to creating content and has already reached the point where "we have as many programmers as we do editors."

That's a dramatic statement for a publisher to make, but it reflects the reality that our business is changing profoundly. Reference data has traditionally been standalone and passive, and that constrained both its utility and its value. Need to find something in the old days? You'd stop what you were doing, look it up, and then go back to what you were doing, often cutting and pasting or re-entering the reference data you had found. That's not efficient or productive or easy, which means that a lot of directories and databases became place of last resort, destroying their value. Information that is used frequently and valued highly is information that is integrated into the daily work of the customer, if not driving the daily work of the customer.

We've all talked about the desirability of owning "must have" information. This new environment allows us to get to that goal more easily than ever before, but we've got to see the vision, and make the necessary investment to adapt our products now. Those who do will find themselves with even better businesses than they ever thought possible. Those who don't will end up as roadkill on the information highway.

We're pleased to announce our first Models of Excellence award for 2005 has been awarded to Primary Intelligence for its Account Profile product.

For a handy reference to Models of Excellence winners for 2005 and years past, please visit our awards page for the complete lists and full details.

Feed Me

Just yesterday, VNU's European arm announced a deal with NewsGator to distribute a bundled offering of the NewsGator RSS reader and VNU's business content covering the information technology industry.

Why is this significant? Because I think RSS feeds are potentially very important, and very good news for business publishers, including data publishers. RSS feeds are simply content sent by publishers in a standard XML format to users. Users read RSS feeds with newsreader software such as the product offered by NewsGator. RSS feeds are commonly associated with blogs. There are two ways to view a blog. You can visit the blog just as you would any other Web site, or you can have new blog entries sent to you as RSS feeds. Every time the blog is updated, the new information is automatically sent to your newsreader and you are alerted.

What excites me is not the technology, which conceptually speaking is quite mundane. Rather, it's the potential of RSS as a new and powerful distribution channel. RSS feeds allow publishers to push content directly to the user's desktop, bypassing spam filters and a whole host of other hassles and delivery impediments.

That's why I have begun to think of RSS feeds as "trusted feeds." Users subscribing to RSS feeds are saying to publishers that they value, trust, and want or need this specific content, and they will pay attention to it upon arrival.

And dare I say it, the other reason RSS feeds are so powerful is that they represent push technology. Push technology has been discredited in the eyes of many because it has been so badly over-hyped in the past. But I increasingly believe the successful publishers of tomorrow must have a push aspect to their product. It's simply the only way to engage your attention-deprived users in a value-added way that doesn't offend. I would even go so far as to say that the surprising resiliency of print publications is due largely to the fact they push content to users, a different form of trusted feed if you will. RSS feeds aren't only for blogs and news stories. They are equally adaptable to pushing out new listings and other event-driven data. This kind of continuous customer connection is crucial these days as more and more publishers find that it's actually easier to sell a subscription than it is to get a subscriber to use a subscription. And if they don't use it, they won't renew it. Staying visible with your subscribers is essential. RSS feeds provide a low-cost and increasingly popular way to do this. With RSS feeds, the medium is very much the message.

Click Clarity - Getting What You Pay For

It's been an interesting week in the world of pay-per-click. First there was the big New York Times article on click fraud, which gently concluded that the search engines will ultimately extinguish it, so paid search marketers can rest easy. Then, click fraud was the topic of a lively session at the huge Search Engine Strategies conference, where nobody seemed to think that the problem of click fraud would disappear anytime soon.

There also was the article in Business Week suggesting Google might just be a "one trick pony" given its near-total focus on paid search advertising. For good measure I'd throw in the announcement by the snap.com search engine that it is rolling out a "cost per action" advertising program that allows advertisers to tie payment to specific activities, such as downloading a white paper, registering or making a purchase. Keep in mind that while snap.com may be a small player, it's an Idealab company, and they're the people who invented paid search in the first place with a little company that later became Overture.

All this market discordance says to me that we're on the verge of a new generation of pay-per-click business models and tools that will reflect a better understanding by all parties as to what pay-per-click can and cannot deliver.

It's been my view that the phenomenal growth of pay-per-click has been fueled by hype and misunderstanding. Advertisers embraced pay-per-click because of its compelling COD -- cash on delivery -- premise which offered guaranteed results. Is it any surprise that advertisers flocked to it?

Despite their loose use of terminology, paid-per-click providers aren't really in the pay-per-performance business, at least as advertisers define it. These providers are selling traffic to their advertisers, with absolutely no guarantee that this traffic will turn into sales leads, purchases, or anything else for that matter. Stated another way, these providers are delivering what those in other media call advertising impressions, they just charge for them differently.

My sense of the market is that advertisers, sensitized by such issues as click fraud, are rapidly coming to realize that they've been buying impressions, not performance, and are now starting to demand real pay-for-performance that ties payment to specific, measurable and largely fraud-proof actions. Ultimately, what advertisers want, they get.

It's too early to say if this shift will be good news or bad news for data publishers, but it seems likely that this new clarity on the part of advertisers will work to level a playing field that had tilted much too far in favor of the search engines. Finally, everyone will truly get what they paid for, and that is a good thing.

J.D. Power: The Next Standard & Poor's?

While one could easily dismiss McGraw-Hill's acquisition of J.D. Power as a financial transaction given the seeming lack of fit with the various McGraw-Hill businesses, I'd suggest that this acquisition is a brilliant move, possibly in league with the 1966 acquisition of Standard & Poor's. Indeed, the two companies are similar in that both are strong and trusted brands that deliver needed, objective guidance in large and important markets.

And it exploits a trend we've been harping on for some time: the greatest need of both business and consumer buyers, all of whom are overloaded with information and starved for time, is objective third-party guidance in consistent, standardized form. We call it the "new 3R’s," -- ratings, rankings and recommendations, and J.D. Power is the embodiment of this type of high value information. McGraw-Hill has picked up one of the biggest names in one of the hottest segments of the information business, so the deal is already looking smart at this level.

Is it fair to call J.D. Power an information company? I think so. After all, its business is to gather, database and publish consumer opinions on a wide variety of products. If you call the gathering process "research," then you would regard J.D. Power as an awkward fit with McGraw-Hill. If you call this gathering process "compilation," then J.D. Power looks more like a database information company, and McGraw-Hill has a strong track record with that type of business. Admittedly the line is blurry, but I'd argue that the owner of the company can push it into one camp or the other.

So how does J.D. Power, a ratings database company fit with the existing McGraw-Hill empire? Think of how the Aviation Week Group could amplify its market dominance as the new source of data on passenger airline satisfaction, which it could extend worldwide. Think of how the Construction Group could leverage its position as the preeminent provider of residential and commercial builder and landlord satisfaction data. Think of the endless stream of valuable "best of" content for BusinessWeek. And perhaps the greatest opportunities of all could come from leveraging qualitative data from J.D. Power with quantitative data from Standard and Poor's that could lead to breathtaking new opportunities powered by two of the best-known and most trusted brands around. And none of these even addresses the possibilities inherent in the custom side of the J.D. Power business, where it helps businesses measure the satisfaction of their own customers.

What's the downside to this deal? Figuring out how to sort through and prioritize the endless array of new opportunities this acquisition offers. J.D. Power is a huge brand backed by a powerful data collection platform churning out some of the most sought-after content anywhere. In my opinion, J.D. Power has loaded the bases, and now McGraw-Hill is at bat. Watch out!

Quality Clicks In

A major article in Wednesday's Wall Street Journal is suggesting that advertisers are beginning to balk at the rapidly escalating costs for keywords. The article cites examples such as "mortgage," which now goes for $7-11 per click, and "mesothelioma," a form of cancer caused by asbestos, which goes for $49. It also notes that eBay, one of the largest purchasers of keywords, is publicly complaining about high price levels. The article suggests that high prices, combined with growing awareness of click fraud, and the presence of middlemen, could cause a backlash that would curb the rapid growth of paid search revenue.

As Executive Editor Staci Kramer of PaidContent.org astutely notes, "The real lesson here: nascent also equals unpredictable, and overreaction in any direction can -- and will -- do damage." But marketing sloppiness exhibited by many keyword marketers is taking its toll as well. Increasingly in a product search, I'll find an eBay ad saying it's got what I'm looking for. When I click through to eBay, I frequently get the message "no items found matching your search term." Perhaps eBay thinks it is clever marketing to have dragged me to its site. My reaction, however, is that eBay just wasted my time, and I am sure to be less receptive to its keyword come-ons in the future.

It's not just eBay; a large number of online retailers seem to be buying keywords for products they don't sell, and brands they don't carry. The marketing objective appears to be to get me to their sites, even if under false pretenses. This game of traffic for traffic's sake turns the Web from a precision marketing tool into a mass medium. Run enough eyeballs past your site, and some of them will buy.

The paid search industry is beginning to realize just how crudely marketers are applying its very refined technology, undermining their real value proposition in the process. That's why they are starting to educate customers and give them tools to use keyword marketing correctly and productively. Credit FindWhat for helping lead the way by offering technology that shows how well clicks on ads convert to sales. FindWhat CEO Craig Pisaris-Henderson, who will be a keynote speaker at InfoCommerce 2005, believes better understanding of returns will ultimately encourage more spending on searches, but in a less speculative fashion. In a bold move to improve not only click analytics, but the overall quality of clicks, FindWhat removed a large number of marginal Web sites from its network a few months ago, making a big bet that as keyword marketers get smarter, the marketplace will reward those who can deliver higher quality clicks.

Step back a bit, and it's not hard to see that paid search marketing is going through an initial growth phase, complete with a gold rush mentality, lots of misinformation, and lots of money being wasted. But there are now signs that this phase is coming to an end, to be replaced by a new phase where savvier, more educated marketers will start using the technology in a much more sophisticated way. This will present new challenges for the big search engines, and create lots of lucrative opportunities for online publishers.