Thursday

Q&A Interview with Jaffer Ali - Vidsense


Jaffer Ali, President of Vidsense, can be labeled a provocateur because of his very different and cutting edge views on the future of the media. And yet, his thought provoking opinions and insights cannot be easily dismissed. Jaffer has been on the cutting edge of the digital business for over 25 years and has experienced the rise and fall and rise of media from many vantage points. His latest venture, Vidsense, bundles video content and viewers and delivers them directly to advertiser websites in an interesting and user friendly manner.



CW: Jaffer, What is your background - how did you get to where you are today?

JA : I started out in the home video business way back in 1982. My family started an independent home video label (MPI Home Video) and we distributed the Beatles' films Hard Days' Night, Help!, Magical Mystery Tour, Honeymooners' Lost Episodes and many other classic TV shows.

I left the family business to create a direct-to-consumer video marketing company. We sent catalogs in the mail to video buyers. We created joint ventures with Home Shopping, Sneak Previews and even country star, Ray Stevens. We purchased every type of media in those years; radio, TV, print, and even tried billboards. After selling that company in 1995, my sister, cousin and I moved on to doing television direct response. We sold videos with DR commercials. Some of our success was with Riverdance and Lord of the Dance. Of course for every one hit, there were 15 disasters. The business was a hit business and we were always chasing the next hit which proved economically challenging.

So in 1997, we started experimenting with selling videos online. We bought advertising from EVERYONE back then...even cut a deal with Mark Cuban's AudioNet (before it was renamed Broadcast.com). We tried banners, audio banners, we streamed video in 1998 with Mark's company. Of course the video was a postage size image and with dial up, the quality was anything but useful.

We were doing only DR online back then and discovered only one medium that worked; email newsletters. We discovered a niche of text email newsletters that we could place text ads in and get an enormous ROI. We found 16 of these that we were advertising in weekly and decided to create our own publications/newsletters in 1998. We created a daily joke newsletter, bizarre news, recipes, film quotes, and inspirational quotes.

We not only were an e-commerce company selling videos, we now owned our own media. We grew rapidly and within months had 100,000 subscribers to 6 different publications emailed daily. That totaled 6 million ad impressions per month since we deployed daily and each publication had 2 ads.

We decided to offer 50% of our media for sale and contacted EVERY ad network in 1998. Not a single network knew what to do with our ad inventory. But we knew first-hand that our media was the best available online because we had tried everything. But no ad network wanted our inventory. So Nov. 30, 1998 we created the Pulse Email Newsletter Network or PENN with our owned and operated newsletters plus added the non owned publications that we were already buying space inside.

We had 21 publications with 610,000 subscribers in the network. Intel was our first advertiser and we were off to the races. At its height, we had 62 million subscribers and over 900 publications in the network. Our client base was Buy.com, Pets.com, eToys, British Airways, Zing and many more.

The dotcom crash, SPAM clogging in boxes and 9-11 hurting our travel clients took its toll. In 2003 I wrote a business plan on how to bring video clips to the Internet and offer DVDs for sale. Sort of an MTV with an ordering option. We began to get license deals with home video companies.

We created one of the first video portals called Evtv1.com. In addition to selling DVDs, we sold pre-roll. NETFLIX was taking all we could deliver back in 2005 and that is when we noticed major problems with pre-roll. Users hated them. Click thru rates declined quarterly. Only 1 in 3 clips could carry a pre-roll without destroying the user experience.

Then in 2008, lightning struck. The question hit me; What if the video view could be terminated on the advertiser's website and we delivered the streamed clip AND the visitor? Vidsense was born with that question. We got funding in 2009 and started proving the model. The Vidsense network now generates more than 11 billion monthly page views, and can drive more than 250 million monthly visitors to brand websites bundled with licensed video clips. Vidsense has more than 20,000 publishers participating in our network. These publishers/websites place our "Video Snack Bar" on their sites and they make more money per video view than if they placed a player on their site. Vidsense offers safe, scalable brand reach for the advertiser. For the publisher, we offer a way for non-video sites to offer video snacks to their visitors without licensing and technology issues. For the content owners, we offer a fair royalty for their content. In short, we offer a sound media ecosystem.


CW : What is the payout for the publishers?

JA: We actually do something few networks actually do; we negotiate with each publisher upon acceptance into our network. We do not have a set payout that goes for every publisher. The only thing we guarantee is that our payout will be higher per video view than any other video network out there. We just insist that the video view play in a new browser window.


CW: What do you think are the next trends in the online advertising environment?

JA: Presently, most of the media and advertising models have not been created for advertisers to scale. Google may scale for Google, but it certainly doesn’t scale for advertisers. That is why they need 1.5 million advertisers. They cannot deliver millions of visitors to a brand website every day.

We will see new ad models that have scale as a point of departure and not as an after thought. The present online ad environment was created for niche, “long tail” marketers. Having a scalable ad environment will reverse this idiotic trend. This will then attract the huge brand ad dollars that have largely stayed with television. Scalable reach will be accompanied by a trend of brand websites controlling the eyeball on sites they own instead of renting eyeballs on publisher sites.

We also believe that the definition of online reach will dramatically change. Why? Because current display banner ads just might be the most useless, ignored advertising medium ever invented by man.


CW: What are your views on consumer privacy?

JA: I have also written about this extensively. We are experiencing an almost complete symbiotic relationship between corporate and government collusion. Google, AT&T, and all BT companies are just a subpoena away from handing over any PII (Personally Identifiable Information) to the government. Orwell never envisioned corporations violating our privacy as they are now. His dystopian view of the world had only government savaging our privacy.

Violating our privacy in the name of the false, clay idols of targeting only serves to defy and desecrate our dignity. Even if the present targeting methodologies worked (which they are existentially flawed), they would be disqualified by any ethical or moral standard worthy of its name.


CW: What would you say are the most dramatic changes in the media industry in the past five years?

JA: The futile attempts to avoid recognizing failure has resulted in all media "doubling down" over and over. And the result has been an ever-accelerating rush to the bottom. Common sense has been abandoned. Everyone knows that if you are in a hole, one should stop digging. But media
across the board has rented power shovels to dig ever deeper. The obsessive and futile search for "one-to-one" marketing is a reflection of obscene narcissism. Media and marketers have tried to divine what makes each of us different and have utterly ignored what we share in common. In the process, we have increased choices catering to as many different tastes as possible. Media and marketers have thus sacrificed scale for idiosyncrasy. We have developed more and more targeting tools which further erode brand loyalty. Behavioral targeting is just the most recent boondoggle that will dig an ever deeper hole for media and marketers. Audience fragmentation and marketing fragmentation both operate against scale. Media and marketers are embracing each other in a death grip.


CW: But what about products that are niche by nature such as vitamin water? Isn’t behavioral targeting a way for advertisers to better pinpoint potential consumers in an efficient and affordable way? Not all products are mass.

Having a niche product does not confer some talismanic right for a viable business. I once had a client who flew out to meet me to demonstrate his product. It was a “portable toothbrush”. In fairness to him, it was encased in device that looked like a fountain pen. Having a niche product for left-handed midgets doesn’t mean that it is a viable business. You are 100% correct that not all products are mass…and yet we all need to realize that not all niche products are economically viable.

Your question about behavioral targeting assumes that it works. The reality is quite different. The fact that there are a multitude of anecdotes pointing to its effectiveness ignores the reality that it has failed miserably MANY times. BT is just the latest snake oil being sold by folks who really do not even understand its underlying assumptions. Chief amongst the misconceptions is the notion that human behavior is rational. This was the same disastrous assumption that led to the collapse of the stock market. I have written about this in much more detail and will not go into this more deeply right now.


CW: And what about mass type products that develop sub-brands like laundry detergent that begets environmentally friendly versions?

JA: Charlene, we are just emerging from the most self-indulgent time in our nation’s history. Do we really need 37 types of toothpaste? 47 types of corn flakes? The number of SKUs stocked by stores escalated dramatically over the past 20 years and only now is being rolled back. Walgreens announced a reduction of25% of their SKUs. Wal-Mart is reducing its SKUs.

Media fragmentation and product choices went hand in hand. People actually thought that having customized license plates expressed real individuality. Self-indulgent narcissism was nurtured thru more and more niche product lines. This “golden age” of choice did not create a healthy ecosystem. And as Barry Schwartz wrote in The Paradox of Choice, increased choices did not make us happier. It led to a more and more complex environment.


CW: Jaffer, if you think niche products will cut back, what is your long view of digital niche media - millions of websites and blogs etc?

JA: The long tail marketing concept was thought to help niche media sustainability...it does not. There will be cable networks going out of business by the gaggle. Millions of websites and blogs will recognize that they do not have a sustainable business model and with rare exceptions, only those that are hobbyists will continue. I personally have had a Blog for 12 years that is a collection of inspirational quotations from sages. Quotations are a complete passion of mine and not a business. This is an example of "passion over profit". It would be self-indulgent narcissism and vanity to believe that my hobby is a sustainable business.

Millions of websites have created a business for Google and intermediate networks, but those networks cannot offer a sustainable revenue stream in most cases. This is not the least bit controversial. Just ask how many of those millions of websites and Blogs are making a thriving business from their passion. And niche cable networks by and large are collapsing in on themselves. The end of self-indulgent narcissism where 15 different types of toilet paper (to be used on our backsides!) is gladly coming to an end. Our happiness and media ecosystem should never have been tied to trying to satisfy every indulgence.


CW: Jaffer, I am almost afraid to ask - please give me three predictions for the next five years.

JA: All of the following predictions are predicated on a landscape that understands that failure will no longer be dressed up as success.

A) Consumer and media choices will be curtailed across the board. As mentioned earlier, do we need 37 different types of toothpaste? 49 different cereals? We are starting to see the trickle of less skus in Walgreens, Wal-Mart and the cereal aisle. This in turn will be followed by less media choices on DirecTV and cable. Channels catering to ever more niche audiences will go out of business because they are not sustainable... just like 49 cereals are unsustainable.

B) Behavioral targeting will be recognized for the snake oil it is. Plus, the invasiveness of its methodology will be seen as unethical and immoral.

C) Brands will return to what made them: scalable reach. They will figure a way to wrap themselves around content in all media formats and scale. This means brands will increasingly subsidize content like in the glory days of radio and television. And media will figure a way to accommodate them because that is where the money is: big reach for big brands. Concentrating on self-indulgent niches is a disease of the soul and brands will rediscover the soul of their brands by emphasizing our commonalities, not our differences.


CW: If your first prediction comes true, how do you see that impacting the media sales marketplace?

JA: A less fragmented media marketplace that recognizes its business is satisfying advertiser needs will lead to simpler solutions. Brand advertisers want scale. They need scale. Ask P&G. Ask Unilever. Ask any large brand advertiser and they all will tell you that scale is much more difficult to achieve in today’s fragmented landscape.

We agree, but believe there is no technological solution when you ask wrong questions. We cannot scale for large brands by ADDING. We will scale by SUBTRACTING. Less will be more when it comes to our media environment.


CW: If your predictions come true, do we need 1000s of television or cable networks? What will happen in that area, in your opinion?

JA: I think it is patently obvious that thousands of cable and television networks are not sustainable as businesses in a post-narcissism era. The same holds true for websites as well, but since the barrier to enter and sustain a website is much lower than for TV and Cable networks, niche tastes will be serviced by passionate hobbyists. I call this the “Passion over Profit phase.


Interview conducted by Charlene Weisler, a research veteran, member of the Set Top Box Collaborative executive committee, the CTAM Research and Research Planning Committees and a CIMM consultant. She can be reached through her blog www.WeislerMedia.blogspot.com or at WeislerMedia@yahoo.com.

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