Friday, January 28, 2011

Making Money Advertising




Like him, or hate him, Morgan Spurlock has quickly become a staple of the documentary world. It all started with the premiere of Super Size Me at the 2004 Sundance Film Festival. His personal adventures have taken us inside of the world of fast food, into the battlefields of the Middle East, and now into the world of product placement. Well… it’s not that simple. Spurlock set out to make a film about product placement and instead may have created the most meta movie ever produced.



The idea was to direct a documentary titled The Greatest Movie Ever Sold that would explore the growing world of product placement in television shows and movies. The twist being that the doc would be completely financed by product placement. Sounds simple enough, right? Actually, it’s a bit more complicated. The movie follows Spurlock as he tries to pitch the concept to various brands (Spurlock claims that almost 500 brands were contacted). As you might expect, finding twelve companies to cover the reported $1.5 million budget wasn’t easy — especially considering the controversial nature of the filmmaker.


So while the movie features cutaway segments helping to explain the process of how branded sponsorships end up in television and films, the majority of the documentary is Morgan’s quest — to find funding and creatively insert the product placements within his journey. For example, he drives everywhere in a Mini and drinks Pom during his interviews and meetings.


But it doesn’t stop there. Morgan also explores the experience of co-promotion — in this portion of the documentary we see how the film, the movie you’re currently watching, will be sold to consumers through cross promotional co-branded advertising. We even see Spurlock out promoting the documentary on late night talkshows (taped segments which will later run the week of theatrical release). So essentially, we’re watching a movie about the making of the movie we’re watching, from funding to week of release promotion. I doubt it will ever get more meta than that.


The more interesting segments involved a trip to Sao Paulo, where outdoor advertising has been banned by law, a trip to a company which Hollywood employs to test movie trailers, analyzing viewer brainwaves using MRI machines to find out which commercials created more of an emotional response, and a trip to a school which is selling advertisements inside of their school buses. But on a whole, I learned almost nothing new about the world of product placement. Those three examples have more to do with advertising as a whole than advertising inside of film.


Just as Silicon Valley was starting to come to terms with the sudden departure of Apple founder and CEO Steve Jobs, another technology giant dropped a bombshell: Google CEO Eric Schmidt said he is stepping down to become executive chairman of the company. Schmidt says he will focus primarily on government relations, while Larry Page is going to take back the CEO role he held until Schmidt arrived to take the job in 2001. Although Schmidt will still be around to advise on various matters, the executive shuffle makes it clear that Larry Page is now in sole control of the web giant. But does he have what Google needs? That’s not obvious.


After the news broke Thursday afternoon, Schmidt posted a message on Twitter that linked to his blog post about the changes, also writing “day-to-day adult supervision no longer needed!” That comment was a reference to the fact that Schmidt — a former senior executive with Sun Microsystems — was seen by many as the “adult supervision” the two young billionaires needed in 2001, when they were planning the stock offering that eventually came in 2004. The memories of the tech implosion of the late 1990s were so fresh still that many clearly felt Page and Brin needed to be stopped before they blew all Google’s money, and since Schmidt looked the part of a senior executive, the company’s backers felt he would go over better with investors.


Over the past 10 years, Schmidt has repeatedly stressed — as he did in his announcement and on the earnings call — that although he was the chief executive, he and the two founders have functioned more or less as a triumvirate, advising each other and debating various courses of action. Schmidt has suggested this is because of the mutual respect each had for the other, but his role was undoubtedly also influenced by the fact that Page and Brin share ultimate voting control of the company, thanks to their majority ownership of Google’s multiple-voting shares.


Now, Page has taken the reins as CEO, and Schmidt made it clear in his blog post about the news that this was done “to simplify our management structure and speed up decision making.” After the split, each member of the triumvirate seems to be taking on the role for which he is arguably the best qualified: Schmidt, who is the most senior (and tends to wear a suit), becomes the public face of the company when it comes to government: meeting with senators who are investigating the company’s privacy infractions, for example, or appearing before congressional committees, the FTC, and so on. Page becomes the day-to-day leader, and Brin gets to spend time on the projects he enjoys (which may or may not include self-driving cars).


How Schmidt performs in the governmental role remains to be seen. He might have to tone down his penchant for inappropriate jokes about how people “can just move” if they don’t want their houses to be photographed by the Google StreetView car, or his comments about how “If you have something that you don’t want anyone to know, maybe you shouldn’t be doing it in the first place.” That’s probably not going to go over well in Washington.



The reality is, Google is facing challenges on a number of fronts. Yes, it turned in another stellar performance in the most recent quarter, with revenues climbing by 26 percent to $8.4 billion. The search-related advertising business is still doing extremely well, and that cash cow has allowed the company to do many other things, including promoting the Android operating system and running a number of popular (but money-losing) services such as Gmail and YouTube. But the tech giant has been unable to get much traction on the social-web front, and that has led to criticism that it’s losing the battle — or is at least in danger of losing the battle — for both users and advertisers to Facebook, whose share of the online-ad pie is growing at a phenomenal rate.


Critics are also getting more vocal about the rapid deterioration of Google’s search results, its core business, thanks in part to the contributions of “content farms” such as Demand Media, with many saying Google hasn’t done enough about the problem because it gains ad revenue from those publishers. Then there are the governmental hurdles Schmidt is expected to help the company leap: a potential antitrust investigation by the Department of Justice into Google’s proposed acquisition of travel-information provider ITA, along with pressure from Congress on the company’s approach to privacy, and continued difficulties with foreign governments like Italy and China.


Larry Page is taking the helm at what could be a turning point for Google. Its core business is under fire; it’s losing ground to Facebook in an important new market; and it’s still relying on search-related ads — a market getting long in the tooth — for 90 percent of its income. It has been unable to build any substantial new businesses, despite a number of attempts, including its recently rebuffed $6-billion acquisition offer for Groupon. As angel investor Chris Dixon put it, some Google watchers are probably asking: Is Page’s return like Steve Jobs coming back to Apple in 1997, or is it more like Jerry Yang’s return to Yahoo in 2007?


Related GigaOM Pro content (sub req’d):



  • Why Google Should Fear the Social Web

  • Lessons From Twitter: How to Play Nice With Ecosystem Partners

  • What We Can Learn From the Guardian’s Open Platform




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