So, it’s official – while many of us (especially on Twitter) waited and watched over the weekend after All Things D broke the story, Yahoo has agreed to buy content sharing platform Tumblr for $1.1 billion in cash. The analysis has been varied and thoughtful: why Tumblr’s exit is about 30% of what it might have been (they failed to demonstrate that they could monetize on a timeline that would suit their investors/were running out of cash), why the value isn’t in their technology, but rather the networks’ function as a “vector for viral sharing“, and, finally, how Tumblr can “make money without pissing us off” (leverage tag pages, keep your hands off my content).

I had the chance to hear Tumblr CEO David Karp speak at the GigaOm paidContent Live conference in New York just a few weeks ago. In a 1:1 interview with Mathew Ingram, Karp referred repeatedly to Tumblr’s value in “Helping get people to the stuff that they’re actually going to love,” which struck me as both interesting and incomplete. If Tumblr’s value lies in not just your content, but ultimately in its ability to filter and anticipate and deliver that content in a way that adds incremental value, that’s promising. It’s also a model that requires significant technology investment (robust search and a brilliant, best-in-breed recommendation engine that uses highly sophisticated collaborative filtering). Content is like ore, and those technical filters are required to help users refine it in order to mine and generate that additional value. To do this your tech had better be killer; from what I have seen so far, I’m not sure that’s the case today.

Nevertheless, if that’s the proposed unique value prop – rather that just a publisher of cool stuff, building a better filter in order to be a content force multiplier (which is really the “building a better mousetrap” of the Information Age, when you think about it) – how do you monetize it? “Display advertising” and “paid search” are incorrect answers. These revenue models are so deeply commoditized that to begin to rely on them for revenue serves to commoditize your business as well, regardless of how unique or robust (“commoditization by association”). This is short-term gain for long-term pain, and as we’ve seen, deadly poisonous to future innovation in generating revenue from attention. If that’s the best Yahoo and Tumblr can do together, Tumblr will die a slow death like so many other past acquisitions, in this case because of what you might call the “MySpace death spiral”: reliance on eyeball- rather than engagement-based advertising erodes the user experience. Users leave (especially a risk here since micro/blogging technology is pretty ubiquitous). Eyeball-based numbers start to drop, revenue targets are missed, anxiety ensues and the short-term answer is to further junk up the user experience in order to deliver more impressions. Rinse and repeat, and within a very short period of time you have a virtual ghost town.

I would argue that this will be a hard trap not to fall into: platforms like Facebook have come to rely on the easy source of display revenue to the detriment of figuring something out that will actually allow advertisers to add value to the user experience at scale (sponsored posts are just another form of “spray and pray”). Of course, advertisers, and particularly their agencies, are the enablers here – they want three basic things: round pegs for round holes, scale, and “set it and forget it”. In my experience, anything that doesn’t fit into a CPM or CPC model is a bespoke option that is lovely to pilot, generates great results and shows the CMO some cutting-edge thinking. It then quietly gets discarded in favor of more efficient and reliable agency revenue streams.

There are three things on the Tumblr/Yahoo to-do list for 2013:

1. Push the edges on intelligent recommendation technology (just think of the dataset they must have!)

2. Innovate on engagement-based ad format design

3. Bypass agencies: try to build partnerships directly with brands to help bring scale and meaning to a revenue model that is based on adding value rather than the very comfortable “interrupt and repeat”

If they don’t get two out of three right, we’ll be talking about Tumblr in the past tense faster than you can say “Rich Kids of Instagram”

Success in real-time marketing is as much operations as creativity

Ever since Oreo suggested that you could “still dunk in the dark” during the 2013 Super Bowl blackout, real-time marketing (RTM) has become the new black. Never mind that the phrase was first coined in 1995 by Apple marketing guru Regis McKenna; this winter, breathless media pundits across the social web touted the brilliance of Oreo and its agencies for inventing something earth-shatteringly new and exciting.

However, the real story behind Oreo’s timely tweet is perhaps not so startling after all. I moderate a weekly webinar for Social Media Today, and on one of our recent shows, David Berkowitz, vice-president of emerging media at 360i (who leads digital strategy for Oreo), reminded our listeners that the brand began building the culture and processes to support its real-time approach almost a year before, with the start of the Oreo Daily Twist campaign – 100 days of real-time content to celebrate the cookie’s 100th birthday.

By the time the Superbowl rolled around, both agency and client teams were operating like a finely tuned machine, and were about as close as you can get to experts at marketing in the moment. In Berkowitz’s words, they made content every day – Feb. 3, 2013 just happened to be a really, really good day.

A lot of the reason that Oreo was able to make this work is strikingly simple and yet totally uncommon. The agency and client trust each other. They worked together to develop an approvals process that was streamlined, they had months of practice (delivering hits and lots of misses) and had the right people at the table to make it work (including the PR team).

They could make decisions quickly, and thought thoroughly about the implications of doing it wrong – being accused of newsjacking, or worse.

In fact, Oreo was ready to go with their famous tweet, but decided to wait a few minutes to ensure the blackout wasn’t an attack of some kind (imagine how differently the analysis would be playing out if it had been?).

If you’re an organization that regularly experiences lengthy, painful approval processes on creative, you’re going to need to do some thinking before you even attempt marketing in real time. Not only because it will be virtually impossible for you to take advantage of the now, but also because throwing out a piece of RTM content is just the start of the chain. If people are interacting or responding to you in a positive way, there are layers upon layers of opportunity to keep that conversation and engagement going. You need to be able to keep your foot on the gas, and having the trust and commitment of legal, leadership and your creative team is the only way you can possibly hope to keep up.

You need to be in a place where you can sit with stakeholders and reimagine the way you market, and then be prepared to change what you imagined based on reality – not your best-laid plans. You need to be flexible, and you need to have a team of partners you trust.

Real-time marketing success is as much operations as it is inspiration – an approach that probably gives many creatives hives. It’s the orchestration of diverse teams (legal, agency, marketing leadership, communications), it’s process and it’s comfort with risk.

Both client and agency need to be prepared and plan for failure – either by getting little or no attention, or lots of the wrong kind. As Berkowitz so aptly noted: confident, curious brands that are prepared to innovate, experiment and screw up will emerge as the true leaders in real-time marketing. There is no shortcut.

A modified version of this column appeared in the May 22nd edition of Marketing Magazine.

Prepare yourself. From September 15th to 17th, 2013, Social Media Today and Blogworld will be hosting The Social Shake Up an amazing gathering of social and digital practitioners in Atlanta. This is the “real deal” – we’ll be joined by leading thinkers (and, importantly, doers) from big brands like AFLAC, Citigroup, Dell, GetSatisfaction and PwC, who will be sharing their insights, experiences and unique perspectives on what it means to be a social business, now and into the future.

It’s been my great pleasure to help curate this event. We’ve created tracks that we feel both reflect the questions you’re asking today, and the ones your boss will be asking tomorrow: Community and Customers, Big Data, Content, The Social Business, The Mobile Business, and Strategy and the C-Suite (that last section geared specifically to senior leaders and the 30,000-foot view they need to take when considering what it truly means to be a social business). I’m really excited about the content and the top-notch industry leaders we’ve asked to participate. This isn’t a theoretical event – this is the best of the best, sharing their practical insights, a window into applied innovation from those who have done it.

I’m also extremely fortunate to be hosting the event live, and I hope you’ll be able to join us. For a very short time, we’re going to be offering early registration pricing. You can sign up to attend here, and I recommend you do so quickly. This is the only event of its kind, and if you’re (like so many others) tired of the sizzle and ready for the steak, this is the conference for you.

Hope to see you there.

When I founded Social Media Group almost seven years ago, I had a feeling I was on to something. There were a number of technology companies that we’re selling (at the time) blogging software, but clients had no idea how to actually engage online. The deal was sealed when, in a client meeting in 2006, a very senior agency person said he was really interested in how “companies were using blogs to talk to their customers”. I’d been blogging since 2004 and knew that I could help firms figure that out.

We started small – for the first year or so of being in business, I could literally read, and write about, every single thing that happened in social media. And I did – I posted daily on the SMG blog, commenting on many others. There was a small group of us working in the space then – all of whom I still count as friends, and many of whom have gone on to amazing careers as some of the most recognizable names in social and digital strategy and execution. One of the things I love best is when I get the chance to hang out with this group of “Social Media Old-Timers” at conferences like South by Southwest.

Social Media Group grew along with interest in social media – in 2007 we were hired by Ford Motor Company to increase their capabilities in social. By 2010, they were winning awards from their peers for their work in the space. We were engaged by companies like 3M to help craft strategic plans, and I take pride in the fact that digital policies and guidelines we wrote for them have been adopted across their global organization. We helped retail and consumer companies, too – in our work with Sleep Number we were able to help them draw the line between a Facebook “like” and direct return on investment – a case study Facebook’s legal department told them they couldn’t use because it was so exceptional. We pioneered – being among the first to use platforms like Outbrain and promoted tweets, and we lead – as in the early days, thought leadership and speaking was an enormous part of our marketing (and was always what I loved best).

Of course there were plenty of mistakes, missteps and misunderstandings along the way, but I learned from each and every one of them (and hopefully repeated very few!). As with all agencies, we ebbed and flowed with the work – but have, in recent years, gotten to an absolutely incredible place in terms of team. I have NEVER worked with such an amazing group of people. I understand that our folks are a regular target for headhunters, and it pleases me to hear that (and also to know that the headhunters never get very far).

And so, with all that in mind, it’s time to talk about where we’re going next. The part of our work that I have always enjoyed the most is the thought leadership and analysis – both external (what does this mean?) and also internal (what we have learned from our work?). Writing, speaking and sharing that industry-leading knowledge and insight has always been what we’re best at, which is why this will be our new area of focus moving forward. SMG will be backing away from the business of agency and creative execution and instead focus on delivering executive counsel, thought leadership and strategic insights based on our years of experience working with some of the biggest social businesses in the world. It’s a big change, and with it come big changes for our fantastic team. Although challenging, I’m very much looking forward to the next chapter.