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According to E-Commerce News, Microsoft has acquired advertising gurus Navic Networks, a, interactive television advertising company whose purpose is to direct and assist advertisers in targeting their ads to the right audiences.

Using statistical data, Navic works their magic by providing interactive overlays for television commercials that allow viewers to react to the commercials by using their remote control in order to get additional information on the product or service being offered.

Microsoft understands the potential value of this acquisition that offers the ability to email information or send it via USPS by using the information on file with the cable company.  Expansion on the existing activities of the company is inevitable and with Navic’s reach of over 35 million homes, Microsoft’s plans include taking their own existing online advertising efforts into the on-air media.

Ken Auletta, respected author and writer for The New Yorker since 1992, joins Charlie Rose against the latter’s bleak backdrop tonight for a chat on Google and related topics. Don’t just dismiss these two as a couple of crusty relics. They’re both media veterans with reputations for thoughtfulness. I’m gonna watch. If you miss the broadcast and wonder why I’d bother to care, watch it online here at your convenience.

18 January 2008 UPDATE! Sadly, Auletta never materialized last night, and I’m wiping egg from face. If you tuned in at my urging — unlikely, judging from my colleagues’ tepid reactions — please accept this Economist story covering Google’s recently revealed philanthropic initiative and Larry Brilliant, the company’s charity guru. It’s a big, ambitious plan designed to offset all that evil Google’s been doing.

The mainstream media have been fixating, unsurprisingly, on Viacom’s effort to get $1 billion from Google, almost two-thirds of what the search engine giant paid for YouTube, as copyright damages caused (allegedly) by the still pretty fledgling video-sharing upstart.

But another Old Media versus New Media struggle is also worth reporting on.

Google’s struggling search rival – Yahoo! – has found its efforts to stage a big revival being seriously dented by its interaction with AT&T, now the world’s biggest telecom company once again.

Yahoo shares fell by a worrying 5% recently when word got about that AT&T wanted to alter the terms of their partnering venture for delivering digital subscriber lines (DSL) for high-speed internet access.

It seems that that AT&T is now willing to share only a much smaller proportion of the revenue that the six-year-old deal pulls in. Industry observers reckon a change could cost Yahoo some $200 million to $250 million a year in this area of especially high-margin returns – while it has been used to annually getting an estimated $800 million out of the partnership.

The setback served to renew skepticism about Yahoo among many investors. Its shares dropped severely last year after a series of awkward and very public wobbles. There were fallings-short of predicted earning, and an embarrassing delay in the rollout of its Project Panama advertising system.

Share prices did recover with the arrival of 2007 – by a welcome 20%, indeed – but this recent brouhaha over AT&T prompted the company to try simply bluffing it out – rather than display anything of substance to reassure the investing community.

It merely dismissed the story as “rumor and speculation” while acknowledging that negotiations have been taking place. “As we continue our conversations, we have a common goal to increase the economic benefits for both parties”, said Chief Executive Terry Semel.

Those conversations, according to some in Wall Street, could even mean that AT&T would actually take Yahoo over in the end. It’s a move the telecom outfit has considered in the past, and now in many ways the search engine/web portal looks to some AT&T executive to be a wounded animal, especially in the wake of the share-price slip, which docked a whopping $8 billion off Yahoo’s market value.

What would you do if you were Google? (Imagine that thought for an instance!)

I don’t mean in size or capitalization, but just as the newish owner of a social networking website that specializes in video. I mean of course the difficult newly-adopted child, YouTube.

Consider that you’d purchased, for $1.65 billion, the upwardly rocketing newcomer, only to find that with all the added commercial scrutiny your jaw-droppingly enormous deal attracted, it turned out that video – the absolute mainstay of your new possession’s identity – was freshly the subject of ugly copyright disputes with some real BIG guys.

And by big guys I mean enormous media outfits like Viacom and NBC Universal. The trouble has gotten serious in recent days with Viacom filing its & billion suit for damages. Also included in the troublesome scenario have been smaller but still on occasions vitally important players, like the Academy of Motion Picture Arts and Sciences, who right after the Oscars ceremony demanded YouTube take down scenes from the trophy-fest – which of course it exclusively owns.

You might consider changing tack, wouldn’t you? Well … softly, softly Google is still trying to negotiate reasonable accommodations with the indispensable titans of the content universe, but at the same time it IS changing tack. It’s concentrating on tying up a broad range of really quite small entities, which in the main could be described as niche purveyors.

Two typical examples … the National Basketball Association with whom YouTube is teaming up to create a new channel where the NBA itself would show authorized clips and where fans could upload short videos showcasing their best moves … and the independent music label, Wind-Up Records, who will stream music videos on YouTube and allow users to incorporate Wind-Up music tracks into their own videos.

Jordan Hoffner, You Tube’s head of Premium and Information Content Partnerships has set up a team dedicated to creating partnerships with such relatively minor entities in the video-production universe, and so far they have concluded some 1,000 deals – with little or no publicity, and certainly no details of the financial arrangements being made public. The partners range from the Sundance Channel to tiny production houses of video. (And just looking at the YouTube home page reveals already participating companies like Ford Models, Ford Motor Company – not to be confused with each other – Hollywood Records, and the YES sports network.)

And just to be clear again, this doesn’t mean that YouTube execs are ignoring the really big video-producers, the ones who can mean such legal trouble, but do control that essential video commodity in such bulk. They have now signed a deal, after all, with the BBC, one of the world’s biggest and oldest content-providers (and how they hate that description!). But it appears to be far from a triumphant accomplishment. Indeed industry insiders are saying the BBC deal isn’t all it was cracked up to be by YouTube, and falls far short of the deals YouTubers have been aiming for, so unsuccessfully so far, with US networks.

Predominantly only short BBC clips are being offered to YouTube visitors, including excerpts from shows like “Spooks,” “Top Gear” and “The Catherine Tate Show” (they’re British – and not known much beyond Britain) as well as the posting of 30 new news clips daily on YouTube – though that is some months away. Advertising, something the publicly-funded BBC has traditionally been forbidden to carry, will be displayed alongside some clips, but only for visitors from outside the UK.

And Google itself won’t be able to take advantage of the new deal – the BBC material is limited to YouTube, since “the Beeb” already has a broader search-based deal with Google’s rival Yahoo.

If there remains any lingering doubt about the true meaning and purpose of children’s entertainment in the media, it comes in research published this week before Christmas. It is of course MERCHANDISING.

The revealing numbers come from the Center for Media Research – as it has surveyed which websites people mostly visit in search of toys and games in this gift-giving season. And where do people mostly go? To the sites of Disney and Nickolodeon of course.

Disney is absolute top of the heap with 8,141,000 unique visitors, and Nicolodeon a close-ish second with 7,898,000.

To ram the message home about the integral, powerful association between children’s TV and selling merchandise, these two TV-based entities are far ahead of the sort of companies whose business is the simple selling of toys. The modern online giant, eBay Toys, and the traditional granddaddy of toy mass-marketing, Toys-R-Us, sit respectively at the lower positions of three and four, with 4,060,000 and 2,968,000 unique visitors each. They lack the benefit of highly-visible, constantly outreaching TV platform of their own.

That more high-minded purveyor of children’ entertainment, public television, also figures in this revealing league table, whether it likes the company it keeps there or not. PBS Kids sits at position number eight, – just creeping over the one million mark for unique visitors (actually 1,108,000). And exactly who it’s rubbing shoulders with, or rather panting closely behind, is perhaps a little disconcerting for this proper educationalist. It’s Barbie, she of the blonde hair and plastic curves, who is just ahead with 1,121,000 hits in position number seven. (The entire league table can be seen at — http://www.mediapost.com/research/cfmr_brief.cfm)

I can hardly beat the simple summary of the situation that a inside player in the game offered recently. “Children’s television shows are just giant toy ads,” according to Gary Pope, a London-based children’s marketing consultant.

And I believe (none too proudly, I’m afraid) that it’s to my old home country that we can look to see future trends, especially at the younger end of the market.

The UK has long been a test bed for children’s television, developing innovations that are followed elsewhere. In the 1950s, it introduced the entire notion of educational TV. Before becoming a worldwide hit, the “Teletubbies” phenomenon was launched in the late 1990s by the BBC. That one show is credited with lowering the age of TV audiences to below 3 years, which had been the previous low benchmark.

Today, some of the most popular preschool shows in the U.S. are British, including “Bob the Builder” and “Thomas and Friends.”

And in both Britain and America TV networks are now chasing preschoolers desperately because, first (an old reason) they are at home a lot, but also (a newer line of thinking) they have not been, unlike their older brothers and sisters, abandoning TV for the Internet or video games.

Well, they’ve done it again. And they got caught – again. When are they gonna learn?

Big business has been producing phony blog sites in promotion of a consumer product – only to be exposed, as both meretricious (of course) but also stupid. The whole maneuver wins no friends – indeed alienates potential buyers in this increasing web-savvy universe.

The latest clumsy fraudster to be exposed is Sony, trying to sell its hand-held game console, PSP, through a site called Alliwantforxmasisapsp, which went live at the end of last month.

But the blog was so obviously fake that visitors immediately voiced suspicions. And finally this week (Wed Dec 13^th) Sony released a statement acknowledging the deception. “Sony Computer Entertainment America developed alliwantforxmasisapsp.com as a humorous site targeting those interested in getting a PSP system this holiday season,” it read. “We’ve now added a posting that provides this clarification to consumers visiting the site.” The company did not comment further.

It wasn’t even handled very well as a trick. The marketing agency that created the site, Zipatoni, first registered the domain name under its own name. Don’t such marketers know that this information is so very easily trackable?

What’s more, the content was all-too-obviously not consumer-generated. One post dated Nov. 22 read, “stick this ad in your girl’s vogue cosmo people who live real simple or your dad’s national maxim geographic sports for men, whoever. They’ll get the point.”

Smells a lot like Madison Avenue to me – not like teen spirit.

The ad accompanying that post showed a downloadable picture of a PSP located amid text that claimed: “This is not an ad,” and “It’s a reminder that… someone close to you wants a PSP for Xmas.”

Since the effort was neither smart nor funny nor edgy, it’s hard to imagine how any genuine bloggers would encourage their readers to print and hide the message in friends’ and families’ print magazines (not such a great or subtle selling technique, anyway, I would have thought).

Plenty of people agreed, and judged the whole effort as simply an insult to their intelligence. The blog’s comments are now shuttered. Sony’s irate consumers, however, aren’t easily silenced.

One enterprising YouTube user, “Babylonian,” created and uploaded a 50-second video montage of the offending blog’s pages. “This is a video response chronicling all the obvious evidence against alliwantforxmasisapsp.com,” Babylonian wrote. The clip, prefaced with the caption, “Sony’s failed attempt at viral marketing,” ends with the commentary, “Sorry, Sony. We’re not that stupid.”

Of course, Sony is only the latest company to be caught trying to pass off corporate phonies as “real people” in peer-to-peer communication. The Japanese-owned giant was preceded by WalMart, to name but one. The retail giant’s effort in October involved its PR agency, Edelman, in creating a fake travel blog called “Wal-Marting Across America”.

Edelman holds a seat on the board of Word of Mouth Marketing Association, which tries to uphold ethics in this murky business. After the subterfuge was exposed by Business Week magazine, the association urged Edelman to review its blogging strategy.

By the way – I like the nickname such sites have gained: “flogs” (a contraction of “fake” and “blog”). In London’s cockney slang, probably originating among street-vendors, “flogging” simply means “selling”, but with a frequent overtone of “selling over-aggressively”. It’s a usage that likely derives from the notion of “flogging a dead horse”. Big corporations’ marketing departments should take note of this etymology.

It may seem odd to turn to someone who works for General Motors to learn anything about communicating with the great American public. Hasn’t their inability to persuade Americans to buy GM cars resulted in one of the most alarming prospects to loom before Wall Street – bankruptcy among the Big Three Detroit manufactures?

That may be so, but I believe there’s power to be derived from experience, and many at GM have been educated by their scary times. At a recent (Dec 7^th) conference in New York organized by the merchant bankers Cowen and Company, Curt Hecht, made observations that contrived to combine humility with confidence –and I think his observations are worth taking very seriously. Hecht is chief digital officer at GM Planworks, dedicated media unit for General Motors products at the advertising and marketing agency Starcom MediaVest Group.

He addressed one of my favorite hobby-horses, video advertising on the net. In a panel on advertising trends he predicted the imminent demise – thank God – on one feature of the genre that is especially irksome – the 30-secong –pre-roll ad.

Consumer acceptance of pre-roll ads is “completely undetermined,” said Hecht, at a panel on advertising trends of the Fortune 500 at a Cowen and Company Internet conference. “I don’t think we know yet what the consumer wants.”

Forcing Internet users to watch a repurposed 30-second TV ad before a one-minute clip doesn’t make much sense, he said. He suggested that post-roll ads could ultimately become a more successful model than pre-rolls because they are less intrusive and catch consumers right before they go on to another activity, online or offline.

While the guaranteed impressions delivered by pre-roll ads appeal to marketers, they won’t amount to much if they end up alienating viewers. “If it’s not driving engagement, then the value proposition on pre-roll will be challenged,” said Hecht.

Online video advertising has sparked great interest among marketers and publishers because of its promise of high CPMs and better branding than banners. The category is forecast to grow by 71% this year to $225 million by market research firm eMarketer.

Dan Goodman, senior partner and executive director at Ogilvy Interactive, defended online video ads in the context of full-length TV shows streamed on network broadband sites such as CBS Innertube and NBC Rewind.

But the audience for online TV is still very small; to date, short clips have gained more traction with Web users. Goodman himself said he only turns to the Web to for video-on-demand when his TiVo goes down.

In comments following the panel, Hecht said online video might borrow a page from PBS, where programs are preceded by brief sponsorship acknowledgements. “I really think that as a core model, having a lighter introduction and then something more substantial at the end makes more sense,” he said.

Hecht noted that GM has experimented with a variety of Internet video ad formats from five-second pre-rolls to video marketing sites such as Living.com, which featured rich media and GM product integration. But he said more market research is needed to figure out what format is most effective. “We’re interested in seeing where the model is going to go,” he said.

GM’s overall ad spend during the first nine months of 2006 is $1.75 billion, according to TNS Media Intelligence.

The world of media commerce is mercifully becoming, even at its topmost
layers at last, more digitally literate.

The latest shift has come with the unexpected departures last week of Ross
Levinsohn as president of Fox Interactive Media – News Corp’s internet
division, which includes the social networking phenomenon MySpace.com – and
Jonathan Miller, chairman and chief executive of Time Warner’s AOL.

Both men have been replaced by more experienced executives from the
television business, reflecting the growing importance of video programming
to the big internet portals. In addition, the new hires at News Corp and
Time Warner show that both companies are installing executives with
extensive operating experience, now that a strategic vision has been mapped
out.

At Fox it’s oddly enough a family matter. From next week, Ross Levinson is
being replaced by his distant cousin Peter Levinsohn, a 20-year News Corp
veteran who was previously the head of digital media at Fox Entertainment
Group.

Over at AOL the stakes are high. Ever since the ill-fated merger between AOL
and Time Warner, the future of AOL within the Time Warner stable – which
includes studios, cable channels, magazines and a cable business – has been
under question.

A move this year to accelerate AOL’s transition from dial-up business to
being a content-orientated portal capable of attracting large internet
audiences and a share of the growing internet advertising pie means that the
division could now have its best chance to mutate from a drag into a growth
engine.

The job of moving from rescue to rehabilitation and ever upward falls to
Randy Falco, who spent three decades in NBC’s various television businesses
and rose to number two at the network.

Falco said something that might strike dyed-in-the-wool digirati, without
long TV memories, as a bit odd. “I’m fascinated by the Internet space”, he
told the Associated Press. “I see it as a very exciting environment to be
in. It reminds me a lot about network television 30 years ago. It’s a little
bit like the Wild West. There aren’t a lot of rules. That’s what excites me
about it.”

He said online advertising should grow 20 percent to 30 percent a year
industrywide, drawing dollars that might normally go to traditional media,
including his former employer.

Back there, Falco’s departure came amid tussles among top executives.
George Kliavkoff (formally with Major League Baseball Advanced Media, of all
interesting places) was hired in August to be NBC’s chief digital officer.
He is charged with “growing new digital businesses into significant
money-making operations”. Executives said the rapid pace of the digital
space meant there could be further staffing changes ahead.

“What people realize is that if you wait too long, you can lose your
audience”, one media executive confided ominously (and understandably
anonymously) to the Financial Times.

My, my … the ups and downs that giants may have to endure when they buy a smaller entity.

If you ever wanted to feel sorry for Larry Page and Sergey Brin, owners of Google, be prepared to feel so now. They hare finding life after buying youTube for $1.65 billion a lot more difficult than they expected, and certainly more so than they are publicy admitting now. The search engine goliath has gone to CBS, Viacom, Time Warner, NBC Universal, News Corp. and others offering tens of millions of dollars in upfront money for the right to broadcast their video content legally on YouTube.

Google CEO Eric Schmidt maintains, with great professional calm, that:

“so far people like [our] message; they are now trying to figure out what to do about it – should they, should they not, under what terms, and those sort of things.”

The fact is, though, that Google needs to agree terms with these particular “people”, as desperately as a fish needs water – or else its expensive video-carrying acquisition will turn out to be as attractive a piece of property as Napster after it was crushed by Big Music litigation.

Traditional Big Media companies are feeling their position of power here. But they’re also being canny – YouTube’s size and loyal user base still strikes them as awesome, and a bit frightening. The industry is reeling over the impact of just one piece of video in particular posted on YouTube. It’s just an ad, designed as such, by ad agency Ogilvy and Mather’s Toronto shop for Unilever’s Dove soap product, but it’s taken off virally with all the energy of a runaway train (or an influenza epidemic, if you object to mixed metaphors).

The 75-second video is pure fantasy, showing a young woman “evolving” – but VERY fast, – into a gorgeous supermodel after using Dove – and it has driven so much traffic to Dove’s site CampaignforRealBeauty.com, that the traffic measurement firm Alexa.com assesses it as three times more effective than the expensive television ad for Dove that aired during last year’s Super Bowl last year,

So YouTube repeatedly demonstrates its reach, but content-providers feel they remain king, and one executive has described to the Financial Times the blackmail-type weapons they are prepared to use, saying:

“The fact is that in three to six months every media company’s going to decide that their stuff gets taken down or that they get paid for it.” It’s like “a big chessboard,” he added.

Oh, the ups and downs, steps forward and back in this kind of e-deal. They’re maybe proving too much for some. Buyers’ remorse sounds like it has set in at NBC Universal, who made a similar acquisition, though not quite as massive as googles’, In march this year they bought iVillage, the women’s networking site pioneered by the doyenne of New York’s Silicone Alley, Candice Carpenter. They paid the then big-sounding number, $600 million – this after having put money into iVillage once before and then withdrawing. This time around they are wondering all over again if it’s worth it.

Jeffrey Immelt, CEO of NBC’s owners, candidly told employees earlier this week:

“You know, we probably overpaid for iVillage,”

I can be a bit glib, and even flip, sometimes. I admit it.

My confessional mode is brought on by Microsoft’s ad campaign starting today (Friday Oct 27, 2006) trying once again to boost their search engine capacity. And what I have to confess is that in a recent article. I dismissively referred to MSN Search as appearing really low on the totem pole of engines, especially when it comes to directing traffic toward internet shopping sites. My fine editors here at E-Commerce Partners rightly answered my own cheap rhetorical question “does anyone remember MSN as a search engine? – at all?” with a resounding “Yes. We do”.

The editors expanded by saying:

“Since we are partly a search marketing company we are well aware that MSN is part of the big 3 of search, though a very small part”

Quite right. And now Microsoft is trying hard to increase that “very small part” at the expense of the other big Two, Google and Yahoo.

Its ad, created by the advertising agency McCann WorldGroup, is promoting Windows Live, which formally launched in September and is intended to eventually replace MSN Search — itself less than two years old — as Microsoft’s flagship in the search business.

They have a ways to go. Despite a massive, expensive campaign last year – said at the time to be the company’s biggest media-buying effort since the launch of the MSN “Butterfly” branding in 2000 – MSN Search just hasn’t been able to gain any real traction with consumers. Last month, Microsoft sites garnered 11.9% of searches — down from 15.6% the year before, according to the digital ratings-measurement company comScore. Google, meanwhile, was satisfyingly growing its market share to 45.1% last month — up from 37.6% one year ago.

Microsoft and McCann have decided to place the ad, in full-page form, in influential opinion-shaping print venues such as The New York Times, The Wall Street Journal, USA Today, the San Francisco Chronicle, The Seattle Times, the Seattle Post-Intelligencer and the San Jose Mercury News.

They take pains to emphasize features like Windows Live’s image search, local search, and mapping tools. Frankly, these don’t add up to too innovative a package to me.

But the confessional mode is what caught my eye most – and prompted my wanting to report on it. The ad says openly:

“Before we begin, let us state the obvious. We’re late to the game. We admit it. But instead of shrugging our shoulders and becoming a footnote in search history, we’ve decided to write a few new chapters.”

I guess it could work. Avis car-rental has made a fairly successful fetish out of being No 2. Can Bill Gates win out by admitting to being No 3?