The rumors started flying today about the possibility of a Microsoft and Yahoo merger, which immediately got me thinking about what that could mean to the online media landscape and to my clients in particular.

When you look at the potential marriage through a business lens it’s hard to believe they would even consider it given this new online media giant would not measure up to the sum of it’s parts. This is all about ego. You can hear the echoes from some testosterone filled boardroom in Redmond “we can’t just let this happen…we have to be the biggest”

Consider the Yahoo home page which is their most valuable media asset today gets up to 120MM impressions per day. The MSN home page also their most valuable asset reaches about the same number of folks. There is a tremendous amount of overlap in these audiences, but you do get the benefit of frequency if you buy both.

If you collapsed these two into one huge portal it simply would not be as valuable to me as an advertiser. The other angle is positive competition. I believe Yahoo has made MSN better. I don’t believe Microsoft would have developed some of their great new ad targeting capabilities etc. had not Yahoo been handing it to them in that area. I could go on about how client support and service etc. would suffer, but I know this is about business.

You could argue that Microsoft could simply keep both brands separate which would make better business sense, but whose kidding who this is not about logic. It’s about being bigger than Google.

Many advertisers who are predominantly acquisition focused salivate at the thought of being able to improve their conversion rates and ROI by buying behaviorally targeted media. It’s common sense, for example a car rental client is typically willing to pay a little bit more for impressions that are targeted to “hot prospects”, ones that look like they are ready to rent a car. Seems like a no brain proposition for both the advertiser and the publisher. The publisher yields a bigger profit from their finite inventories, and the advertiser can possibly improve their ROI.

Here is the rub, this is great for the challenger car rental brand with the smaller budget, and it’s deadly dangerous for the dominant brand with the big budget. Consider how the target segments get created. Often the criteria for determining the “Often Rents Cars” or “Interested in Car Rental” universes is anonymous tagging of computers who clicked on rental car ads, or worse rented a car in the last XX days. The first part is based on click tracking of ads that were categorized generically as “car rental”. Imagine that you are the biggest advertiser in this category on this site and you have effectively placed 70% of all the “car rental” ads on this site. Guess what your PROSPECTS are 70% of the so-called anonymous segment that site sells to your competitors. You have just opened the kimono to your competition my friend. The second scenario is even more disturbing because it actually exposes your customers Many big publishers or worse ad networks convince clients to add tracking pixels to their online forms, applications, or booking engines in order to better optimize their media, or to track performance based deals. Now you don’t have to wonder how they can tag a group of people as “Recently rented a Car”.

If you have been following so far and you are the small car rental brand with the small budget you have a huge smile on your face, and if you work at the big bad brand with the big bad budget you are thinking this sucks why cant we take advantage of this cool stuff.

At this point if you are the little guy you can stop reading and go buy more of this stuff. If you are the big guy read on and I will offer some advice on how you can protect yourself.

Blasphemy you may think. How can he make such a crazy statement? Isn’t Google trading at $500+ bucks?

A journalist recently asked me what I though was a brilliant question to ask in an interview “What gets written about all the time in your space that makes you cringe every time you read it” took me a split second to answer.

I can’t stand the one-size-fits-all online marketing strategy idea. You know what I’m talking about; “Spend as much as you can on search, display ads don’t work as well, and test into everything else.” Sound familiar? “Oh by the way don’t forget to buy yourself and island on second life” at this point I puke.

Let me play out a scenario for you in hopes I can make my point. I’m going to use Banking as a point of reference as an example because I know the business well, but if you work for a bank don’t get too exited, put your pen down I wont use any real numbers, or divulge anything you can use to benchmark. The name of this fictional bank is “Purple Bank” consider it a household name.

Lets take a new checking account for example, it generates $150 in revenue every year, therefore we decide we are willing to spend up to $50 in marketing to acquire each new customer. Again these are NOT real numbers.

We refer to that $50 as our target CPA (Cost per acquisition). After reading every book, article, blog, and napkin about online marketing we decide to test paid search first.

We take those $10,000 we begged and pleaded for and decide to buy a few carefully chosen brand related keywords like “Purple Bank”, “Purple Checking”, or “Purple Account”.

Results come in and….drum roll. We are heroes 200 accounts at a CPA of $25 bucks. The boss is pleased, pats us on the backs and says “get me more. How much money do you want”. At this time he also coaches you on the fact “the brass does not really get too excited about a few accounts, They want volume. BTW we don’t get extra credit for coming in under $50, they want scale”.

These days I get asked at least a half dozen times per week questions about emerging media opportunities. Most folks want a straight answer on what should they care about, and what should they ignore. I’d like to share my mental filter for evaluating every new media opportunity.

I look for these two attributes; “Media Value”, and “Engagement Value”

Media Value is a fairly straightforward concept, simply evaluate what it cost you to reach your specific target audience at scale compared to all other media channels. A recent example would be MySpace. I got this question a lot. Frankly if you are trying to reach that younger audience it is a great buying opportunity given the fact so many advertisers cant get their heads (AKA legal department) over the idea of placing ads anywhere near user generated content. You can simply reach many more of your target for less. Don’t be a wimp, and get in there while it’s still a bargain. On the flip side if reach is what your looking for Second Life has like 5,000 active users at any given time of which no one is likely to fly near your freaking island. Second life is not media this is an experiment. Brace yourself… TV (actually what I mean is national cable) can be a buying opportunity as well. This coming from an online guy.

Like many others, I have been a walking commercial for the shiny little widget for the past week or so. My now well rehearsed response to the question “So how is it?” in case you are interested is; I love it, great phone, the user experience is amazing, the keyboard is lame but better than I expected, even got my corporate email working, but my biggest surprise has been browsing the internet. I don’t care what anyone says the experience of browsing the web on your phone or PDA today sucks. I don’t care if its WAP, Windows Mobile, Blackberry etc. it’s useless and frustrating. Most sites don’t offer a mobile version, and if they do the experience is awful. But now with my iPhone in hand it’s a whole new world. Today I went out and about town running some errands with my son, I had promised him we would see the Transformers movie, but I found myself on the other side of town. Enter my iPhone. I went to Fandango.com (which we recently helped launch) and looked up the closest theatre and movie times, bought the tickets, and got directions from Google Maps. Yeah I know this does not sound like its so advanced. Couldn't you do that on your BlackJack? Sure I could have pulled this off on my old phone with ninja like finger moves, and a hell of a lot of patience. On the iPhone it was just sitting in front of my Mac (yes Mac) at home. Takes my half a second to check on the Sapient stock price (SAPE) which I do a dozen times a day on Yahoo Finance. I’ve tried on my phone before, but gave up. Yahoo can expect less traffic from me. Fandango will definitely get more. My advice is to dust off those mobile business plans, because this time it will stick.

Everyone of you at one point has heard the saying “the data never lies” or “the truth lies in the numbers” these so called truisms sound logical therefore they must be true. Right?

In the book Freakonomics by Steven D. Levitt (a great read BTW) the author surfaces a myriad of examples of how data (when misinterpreted) has driven individuals, societies, companies, and even governments into doing some really stupid things. In some cases these misinterpretations of data have made for some very wasteful, harmful or even tragic results. Can anyone say “weapons of mass destruction”?

Just yesterday I got my hands on a beautiful report consisting of 136 glossy pages, chuck full of beautiful graphs and charts. Some very impressive folks with some very impressive degrees delivered this report at the request of my client. Only problem with the content was their conclusions were 100% wrong.

Fortunately my client has grown to become a very savvy online marketer and he picked up on the flaws in the report immediately. This guy is frankly much smarter than most, so it got me thinking that in the hands of just about anyone else this report could be very dangerous. After reading it most marketers would set people and programs in motion to take advantage of it’s recommendations. Effectively rather than improve their business, they would likely paralyze it’s growth.

Given the complexity of this space, I suspect this happens quite often. The new hot shot with the fancy excel spreadsheet comes in touting the insight of the day, and you mobilize the troops. Let’s put this offer up, or take this banner down, or worse let’s change the price point.

You may be making a big mistake. Cross channel marketing is a messy problem and not a clean binary one that can easily be deciphered. The odds are you are not taking all variables into account. My advice is always try to poke holes in your data, look for interdependencies or other factors which may be influencing your data, test your hypothesis through agile methods, and please don’t forget to consult your experience and intuition. Strive to reach a balance between art and science.

So I’ve gone on the record before about why I think paid search is over rated, granted I don’t mean to say a solid SEO or SEM strategy is not important to your business it is. I feel that search alone gets too much credit. If you look at search marketing as your primary or even worse your only proven tactic to drive business online you are screwed.

For that same reason having a “search only” firm (specially paid search) is not a great idea. I pose only one question would a search agency ever recommend you spend less money on search? Today’s most sophisticated and most successful online marketers track and optimize not in silos but across all tactics such as paid and natural search, networks, affiliates verticals, portals, viral & social media to strike the right balance of demand harvesting and demand creation to truly drive your business.

Search agencies need to evolve from a single point solution or they will die.

This past week, my son returned to school from summer vacation. As the old adage goes, I told him, “Tim, you never have a second chance to make a good first impression.” We can apply this to media planning and buying. As an industry, we have spent much time on how we measure impressions. Between the early days of the iABC auditing to the standard IAB definitions we all seem to live with today, we have become very good at purchasing impressions. Then, determining between DART or Atlas or BridgeTrack how many impressions we “got” for our marketing spend. We have built databases of response rates, agency rate structures, traffic groups to send html code, report generators all around how we purchase impressions. I think we have taken our eye off the ball somewhat. Has technology taken some of the creativity from media?

One could define mass media as targeting a group larger that can sit in one place at one time. Being that I am from Michigan my reference point for this is always the Big House, the University of Michigan’s football stadium. However, by just purchasing impressions online, we have fell into the trap of fooling ourselves about mass customization. We believe via behavioral targeting, demo targeting or other means that we are creating a true targeted experience for consumers when in fact we are simply practicing mass customization. To make a true impression online, we need to focus on the consumer and what they want – how do we create a good first impression and start a relationship?

The second thing I talk to my son about on his first day was the Golden Rule, “Treat others as you would like to be treated.” We all know that personal true two-way communication with consumers is expensive. Typically, this type of selling is set aside for high value items like homes, yachts, jewelry, luxury cars and such. However, can we create an environment by which we can bridge the gap between mass customization of content and having a one to one relationship with the consumer? We believe this is possible if your focus is on how to really make an impression.

As an industry, I think we need to think about how do we fit the content and channel to the message and device. Do we make it easy for consumers to interact by placing short codes in all of our print ads? This seems to be one of the most logical things in the World to do especially in publications like USA Today where I would be willing to bet the ownership of cell phones and the readership of that newspaper is almost 100%. Or, making sure the message and content fits the occasion or venue. As one of my old clients once told me, “Any CMO that has his face to the CEO by default has his rear to the consumer.” A few simple steps can make sure you don’t’ just purchase impressions but help make them.

Many marketers who were early adopters of online advertising had become accustomed to being the heroes of their respective organizations for consistently wining the battle with that elusive monster called ROI. You brought home 5,000 new customers in one month for less than anyone else on your team and you were a “genius” , your boss was very impressed and consequently handed you a few more bucks and said “can you do 10,000” – you did it without breaking a sweat. You can guess what came next, a new goal 20,000. This time it was different, the most you were able to do no matter what was 12,000 – what happened? You did everything right, you applied everything you had learned; rigorous testing, constant optimization, and your go-to media placements and keywords were all covered.

Well there is a HUGE difference between demand generation and demand harvesting. Harvesting existing demand for your products or services is a hell of a lot easier than creating demand for them. That said I’ve learned that the magic sauce for scaling your business is doing both well and in concert with each other.

Very few marketers do this, in fact there seems to be some silly unwritten law in the marketing world that states you should choose a side - you are either a brand marketer or a direct marketer and these are mutually exclusive. Like being a Republican or Democrat, a sailor or a power boater. Even marketing organizations and agencies seem to come in two flavors. I say this is ridiculous. Why would you create demand for your product and not do a good job of capturing it, or conversely why would you expect to harvest more business than your brand commands.

I would attribute most early success in the online space to the inherent transparency and efficiency of the channel for harvesting demand. It suddenly became easier than ever to be a great direct marketer. You now had all the data and tools to be at the right place at the right time to capture demand. What could be more elegant than buying the keyword “purple couch” when you have a line of purple couches for sale this season? The beauty of the web is you now had the ability to reach “everyone” who had that want or need.

I’ll continue with the silly couch example. Sure before you started marketing online you typically sold 10-12 purple couches every month, and now you sell 100  - that’s real growth right? Yes, but you cant mistake that for creating demand. There were always 100 people out there (with very bad taste I may add) who wanted a purple couch; you just were simply not reaching them. Reality check - If you want to sell 100,000 of those purple suckers you’re going to need to get Opra or Martha to tell the world they have to have one before the holidays…that my friends is demand generation.

I can’t count how many times we are asked to “support our offline campaign online” – I get this, but my view (and maybe it is just semantics) it’s about driving an integrated brand experience. This week in a study conducted by Group M a subsidiary of WPP said online ad spending will surpass TV spend in the UK by next year. The forecast calls for UK Internet advertising revenues to hit £3.4bn this year. TV advertising, on the other hand, is expected to grow by less than 1 per cent to £3.56bn in 2008. And by 2009 the UK will see digital as the dominant channel.

Wait so does that mean finally the above the line agency will get that all to familiar call. “Guys we need you to come up with some of that TV and radio stuff to support our campaign” – never-say-never

How many times in the past week have you heard the term “Mobile Media”, or “Mobile Advertising”? I have clients, analyst, and reporters ask me constantly. “Who’s your mobile media expert?”, “What percentage of my budget should go to mobile media?” – Silliness in my opinion.

Most marketers associate the term media with a medium to deliver or PUSH your advertising.  Basically if you see mobile as just another place for your ads, if you intend to include another line item in your media plan that says “mobile” – you have it all wrong.

Mobile is not media it is a point of interaction between a brand and a consumer. You may say well so is a TV spot, and that is media right? Not necessarily the key word here is interaction, and I mean the two-way kind.

Mobile, email, and even the good old telephone are amazing little tools to continue a conversation they should not be used as a medium to solicit one – that is called SPAM.