“…historically, the more precisely-targeted an ad is, the cheaper the rate (CPM) is, because you are reaching less people, and ad rates at the CPM (cost per 1000 impressions) basis are calculated based on reach, not effectiveness.”

A couple of things here. First, programmatic advertising is simply using computers and data to buy ad space automatically, frequently in real time. Yes, when it first came out, it was declared the savior of digital advertising. But, let’s be honest, it was marketers and publishers of small, low quality sites doing the declaring. High quality publishers saw it for what it was – a way for advertisers to cheaply buy targeted ad space across multiple sites regardless of the size of those sites. Size didn’t matter because if a likely BMW buyer was on a small blog or the Economist, the data trail identified her and the advertiser was happy to serve her an ad, on both sites. The problem was, while the blogger was now able to get advertising he previously couldn’t, a site like the Economist saw its CPMs fall.

But the CPMs didn’t fall because the ads were targeted, they fell because the ads were becoming a commodity. If the web is just one big content machine for marketers to place ads, even targeted ad inventory is infinite, and price drops. As bad as this was for publishers, it turned out to be too good to be true for marketers. As AdWeek noted:

“The programmatic open exchanges were discovered to be rife with all sorts of bad ad inventory issues. Threats include ad fraud, such as bots and domain spoofing, as well as brand safety issues (think your brand’s commercial next to a jihadi training video on some obscure website pretending to be The New York Times).”

So no, publishers, and now not even marketers, believe programmatic “will save everyone.”

Back to that confounding CPM statement. CPM, by definition, is not based on reach. It stands for cost per thousand, which explicitly removes the quantity from the number. And very targeted ads sold directly to brands by a publisher’s sales force DO tend do get higher CPMs. But they do have to be more targeted than simply geography and demographics. As we’ve seen, any data management platform can deliver that kind of targeting.

Later in the Axios piece Craig Moffett of MoffettNathanson says:

“And that’ll be, I think, one of the real controversies and challenges that the whole digital world faces, over the next decade — is will, in fact — better targeted advertising lead to more advertising revenue, or less advertising revenue? My suspicion is it will lead to less.”

Here, he makes the key point of the item. It doesn’t have to do with lower CPMs for targeted advertising (which he tends to suggest), but with the overall ad revenue earned by publishers selling highly targeted ad space. The problem, is that while your CPMs may be higher for that space, because it’s targeted and you therefore have a smaller quantity to sell, your overall revenue may likely be lower than selling your full inventory at a lower CPM.

That, is the targeted advertising problem.

A new business model is emerging for media companies, consisting of a traditional core combined with a confederation of sites. Nate Silver‘s relationship with the New York Times and now with ESPN, and <re/code>‘s relationship with NBC and in it’s previous incarnation as AllThingsD with the Wall Street Journal, are examples. As more journalists decide to venture out on their own (Ezra Klein, Jessica Lessin, Andrew Sullivan), the model becomes more viable.

The confederation piece of this model is a group of autonomous websites partially owned by the larger media company, which also provides operational support. This works for the media company because it gets to participate in any potential upside, while continuing to generate revenue from the separated website, and works for the newly independent journalist because he or she gets capital and operational support while still running the show.

At the moment, however, the biggest obstacle to this structure is hubris. The media company believes that the journalist won’t be able to survive on his own, while the journalist believes the mother ship is dragging him down. Somewhere in the middle lies the truth. Some of these journalists will become success stories such as Walt Mossberg and Kara Swisher at <re/code> and Sharon Waxman at my own company, TheWrap. But it’s hard to build a digital media company and many more won’t make it, while others will find that they can live on their new business, but nothing more. And that’s the beauty of the confederation – the media company rides along with the stars, while those who are less successful will be happy they offset some of their risk.

Seen in Pacific Beach, CA…

While confusing pandering for readers with a writer creating a brand, Weingarten suggests that the craft of journalism is being redefined “so it is no longer a calling but a commodity.” A suggestion that implies that somehow news organizations brought this fate on themselves by no longer giving readers “what we thought they needed. Now, in desperation, we give readers what we think they want.” Within the craft of journalism, apparently, there is no greater sin than meeting market demand. What Weingarten seems not to understand is that even in the good old days of newspaper prominence, readers never ate their vegetables if they didn’t like them, they simply turned to the sports page, or the comics. The newspaper, as a package, exists because it has to give readers a lot of what “we think they want” to subsidize what “we think they need.”

Out of all this, Weingarten comes to blame the commoditization of journalism on branding when, in fact, branding is the solution. When faced with commodity prices for its microprocessors, Intel branded them with its Intel Inside campaign. Think of Florida Orange Juice and Chiquita Bananas – successful branding campaigns that rescued products from commoditization. As a collection of blogs and micro-sites, Glam may have a more immediate reason to create writer brands, but it’s a model that can be followed by news organizations. And, except for the fact that in the past only a select few of its writers became brands, it’s a model that is familiar to them. Columnists have always been brands, but brands created by their employer. Today those brands, the newspapers, are declining, and becoming simply a collection of writers. And a collection of unbranded writers is just a heap of “content.”

The industry is being reshaped by technology—but by undermining the mass media’s business models, that technology is in many ways returning the industry to the more vibrant, freewheeling and discursive ways of the pre-industrial era.

From The Economist

Tim Wu, the Columbia Law School prof who coined the term “net neutrality” and current senior adviser at the FTC, was profiled in a recent article in The Chronicle of Higher Education. He quickly comes off just a bit too cute for his own good, ticking off every box on the hipster checklist – tattoos, vintage Hondas, Burning Man, honeymoon in Antarctica. All this and a Harvard law degree. Clearly this is a guy who thinks big thoughts. Well, yes, and it’s those thoughts that seem so dangerous.

The article tells us that in his book The Master Switch, “Wu warns that ‘an unprecedented potential is building for centralized control over what Americans see and hear.'” Wu then goes on to make a case for that potential to be realized in the federal government. He says “his goal in joining [the FTC] was to help ‘reinvigorate the role of a public counterforce to private power.'” Later, as the article describes a class Wu is teaching at MIT, it says he suggests that “in theory, the government could say, ‘Well, this company has clearly shown it’s corrupt. … So let’s just nationalize their source code.'”

When it comes to advocacy of government power, statements like these speak for themselves. They should also give supporters of net neutrality pause when the concept’s father is seen to be arguing less for an open Internet, and more over just who should control it.

All day long, [the front page editors] receive emails from reporters, editors, publishers, publicists and flacks from organizations that include but are not limited to, the following: The New York Times, The Washington Post, The Wall Street Journal, The Chicago Tribune, McClatchy Newspapers, the London Guardian, USA Today, CNN, MSNBC, ABC News, CBS News, C-SPAN, Time, Newsweek, Rolling Stone, The Atlantic, etc. Those emails all ask the same thing: Would you consider placing this content on The Huffington Post?

Is this the rope that will be used to hang original sources of news? Or are these editors and publishers using HuffPo for free distribution – distribution that in

other industries would normally cost money? Can these people really be acting so aggressively against their own interests, or are they rational actors in a new content ecosystem? Surely it’s the latter. While news executives argue about “aggrelooters,” those charged with driving traffic and ad inventory understand that the aggrelooters are really free distributors.

According to the survey, since 2007 a consistent 70 percent of Americans state that they enjoy reading printed magazines even though they know that they could find most of the same information online, and 55 percent have continued to subscribe to printed magazines.

Seems pretty simple – formats matter. It’s lazy thinking to believe that simply because the same information may be available in a new format, the old format is dead. Nor is there reason to believe that a print publication’s web site must be a direct replacement. There is no law of physics that requires all content in a print product to be available in it’s digital version. They’re two different products and meet different needs for their audiences.

Another interesting result:

Additionally, a majority of U.S. respondents state that an important feature of printed magazines is the advertising that helps them learn about new things for themselves and their family.

For all the promise of targeted advertising in digital formats, it seems that print ads do a pretty good job of reaching their target audience. I wonder if a majority of people would say the same about online ads. Seems unlikely, doesn’t it? There are no “network” ads running in the pages of a print magazine hawking solutions to belly fat, only ads that are intended for that publication. And they’re not all measured as direct response ads no matter the creative. In fact, tablet advertising seems to have so much potential precisely because tablets are a platform that allows ads to build off of and extend what’s right with magazine ads.

And finally:

“Enthusiasm for printed magazines is consistent across all age groups, a unique result in consumer attitudes across all the media categories, we surveyed,” said James McDonnell, principal, Deloitte Consulting LLP.

Enthusiasm for a legacy product is a good thing, even as you plot it’s destruction.

Despite the ascendance of search advertising and click-throughs, brand advertising is not going away, and publishers and brands must work together to create and deliver new ad formats and methods to rejuvenate it. Thankfully we see signs of this happening from iPad iAds to AOL’s Project Devil. Yet whenever a publisher comes out with a new ad unit that they sell for a premium, marketers want to determine its worth using the same old measures – mainly click-throughs – that have been so unsuccessful in the past at measuring branding value. It’s short-sighted because, if there’s one thing we can all agree on, it’s that current ad formats are awful and people who click on them are usually poor targets. New effectiveness metrics then, although much more difficult than new ad formats, are also vital.

While not a new ad format, social media advertising (and I don’t just mean simply advertising on social media sites) is now leading the way in brand advertising. Social media gives marketers the ability for their brands to display more personality, better target, and more fully engage resulting in a more robust experience for consumers, and content producers need to learn how to play in that arena. There may be no better evidence of this than the current willingness to use social media marketing despite many companies’ inability to measure its effectiveness. Instead of pretending they know which 0.1% of their advertising works, marketers are back to wondering which 50% works. And that, sad to say, is progress.

Update: Some evidence from eMarketer that tablet ads really do offer a better consumer experience.