5Qs: Federated Media’s John Battelle

John Battelle is the founder and chairman of Federated Media Publishing, a network of independent Web content sites. He’s a digital industry luminary as a founder of Wired, The Industry Standard and the Web 2.0 conference series. He has tracked the rise of Google on his blog, Searchblog, and in a book, The Search. He spoke to DIGIDAY about why the online ad industry has itself to blame for the sparse brand budgets spent there, how brands can become publishers, and why Facebook needs to think differently about ads. Follow him on Twitter @johnbattelle.

Marketers haven’t seen the clear line between investment and return. They see that with TV. We just can’t avoid the elephant in the room. When Kraft puts $25 million into six DMAs [on TV] over one week and sees an 11 percent lift in its scan data off retail, it says let’s do that again. That is a direct line between investment and return. That hasn’t been established online. It leads all sorts of inteligent people to have six or eight lines of debate. One is that it’s the wrong question. Online is a different medium. You can’t expect to draw a bright line between investment and return like TV. Another is we don’t have the right unit/creative/scalability/measurement. I really think the core is the large marketers who are the drivers of this debate, whether they’re actively participating in it or driving it by not moving the money, haven’t seen the return yet. They don’t think they can trust it.

It’s the wrong chart if you think the answer is for marketers to spend more without knowing the return. It’s a super-interesting chart to look at, but not to point to the CMO and say, “Get your shit together and stop spending 60 percent in TV and 10 percent online.” It’s incumbent on us to say what products we can create that would justify that share shift. We’ve failed to create those products. Up until recently, it was not easy to make a scaled, intelligent, trackable, measurable buy across every site on our network. That’s a hard problem to solve when you’ve got hundreds and now thousands of different sites with different content and different authors. To herd those cats on one platform and deliver an ad experience that’s efficient where advertisers can create once and execute many times — that’s hard to do. [Marketers] are scared of leaning into anything that doesn’t have scale. It’s up to us to create platforms to provide that. There’s one place that’s happened in the last ten years: portals. That game has been played. It’s not over. It is what it is. You want reach and scale, you can buy a portal. You want to build a brand at scale, that’s hard to do right now. That’s where all those dollars are sitting in TV land. We’re 16 years in. It’s 1961 in the TV world. It’s time for us to understand brand building in this space and to commit to resources and infastructure that allow us to do that at scale.

One is the idea they’re not publishers. Publishers are the people they buy media from. They don’t know how to be a publisher. Their legal/finance/policy offices say they can’t because it exposes them to liability. They don’t understand how it helps the bottom line. My response is always for them to look around. They’re already publishers. They have people on Twitter publishing. They have a Facebook page. They have a website. They make 30-second spots. They’re making content all day long. They can do it with a strategy or keep being a publisher and not being very good at it. The fact is a brand is a badge that draws people to it because it means something and has a set of values that a community ascribes to. Think of Nike, Apple and Google. All brands at the end of the day have a voice, a point of view and a community that believes in it. In all publishing brands the exact same is true. A brand is a leader and convener of people’s attention and loyalty. There’s a very good reason why great brands are attracted to great media brands.

I don’t think it’s either or. The first great social service of the post dot-com era is search. People don’t think search is a social service, but I do. Conversation is social. You say something to a search engine and it says something back to you. It drove the rise of the independent web. What people found outside the portal was Lolcats and Boing Boing, Dooce and a million blogs. They found all these social sites where they could connect. Search isn’t the opposite of social. It’s not going from a search era to a social era. It’s going from a document-driven web to a people-driven web. It understands you’re a person and responds to you as such. Brands that are on the web have to do this. They have to understand who you are and respond to you. I give a stump speech that shows whatever brand I’m speaking to Google search for its brands. My next slide is “Blame Google.” When someone puts in Sony Vaio [in the search box], Google instantly responds by creating a mini-portal. When you go to Sony’s site and ask it a question, it fails to be as useful and conversational. Blame Google for creating an expectation. That’s a great challenge now: how do we build an infrastructure that allows us to be responsive?

Facebook’s greatest challenge [with brands] is to create an environment where a brand feels like the brand is the platform for the conversation. Right now it’s all about Facebook, not the brand. Facebook is a super-important part of a brand’s strategy, but it’s not the strategy. The web is about people as opposed to documents. Facebook’s [other] greatest challenge is how it plays with the rest of the web. Look at the open graph and like graph. How does Facebook add value to the rest of the web in a way that doesn’t force the rest of the web into a Facebook framework? I don’t think there’s anybody who believes there won’t be a Facebook AdSense product that publishers can put JavaScript in the page and ads show up that use Facebook data. That’s coming. I’m sure they’re busy building it. The question is if publishers will have to use only that service. Is there a more elegant way for independent creators to leverage data from Facebook, and can we think about it differently? It’s not Facebook’s data, it’s the consumer’s data. Let’s say I come to a site and say here’s my token of data that says everything about me. I’ll get my version of ads, content and services. Maybe I’ll get an offer to become part of a reader panel. It’s based on me telling the publisher more of who I am. If I can do that with my Facebook data, that’s cool. Are they going to work in a way that encourages innovation and new ideas, or force everyone in an AdSense-like right rail experience?