From the outside, it appears as if there are two sides to the FM business. One is what we call Conversational Marketing (CM). These are complicated, high-touch, highly-integrated social media executions that involve many moving parts between FM, our publishing partners, the brand, its agency, and the audience. The other side of our business is what is often called "display advertising" - where we sell traditional "ads" placed next to the the great content and communities created by our small number of partners. (Did you know we have, conservatively, more than 24mm uniques in the US, and nearly 45mm worldwide? Yeah, we don't toot our horn as much as perhaps we should - and those numbers miss a good number of the sites we represent).

Anyway, CM and display are related in very important ways. But more on that in a minute. First, we want to address some confusion that has cropped up recently. Earlier this month, FM announced a minor restructuring. We explained that this restructuring was due to our renewed focus on CM executions. Some took this to mean that FM was moving away from display advertising. One writer even went so far as to say that we were “abandoning” display advertising. No matter the cause or source of the confusion, I'd like to make it clear that this is not the case.

FM does in fact sell display advertising - a lot of it. But that's not all we do. The CM business model is not simple, and it's not always easy to explain. But the connection between display and CM is direct: we work with brands to create media executions that are truly valuable (like WePC, MomSpeak, American Express Open Forum, or Toshiba's Laptop Experts), and we then use display to distribute, amplify, and announce those executions.

We do a lot of innovative things inside that display real estate - like RSS feeds, widgets, video, even chat. Yet we also sell a lot of straight display ads, just like any other major publisher. However, it's our belief that a business that sells only display advertising, particularly in a down economy, is heading for a commodity game. That's why we reorganized - focusing on our unique ability to deliver results well beyond the banner.

We know that display advertising works. But it's clear that the real estate any website gives to display has to deliver value to both the audience and the advertiser. As I've argued before, algorithms don't replace community. There are hundreds of companies competing to deliver that value through behavioral and contextual algorithms, and we work with those we consider to be the best. Combined with CM, display becomes more than just ads adjacent to content, it becomes an invitation to a value exchange between marketer, publisher, and audience. In the coming weeks, expect more from us on these issues. It's an exciting time to be in the media business, to be sure.

But FM is far more than that. Forbes put out two ego-stroking lists this week. First, their much followed (and often berated) Web Celeb 25 list. And second, a Top Twitter Celebrities list. While I'm not sure that these lists serve any kind of useful purpose, they do at least provide fodder for me to toot the FM horn a bit. FM partners are all over these lists. :)

FM works with four of the top six Twitter users. And we work with six of the top ten Web Celebs. But remember that the value of social media does not lie exclusively in the "celebrity" crowd. Every FM partner became an FM partner because they produce fantastic content, have an engaged audience and command respect among a community - be that tech, parenting, business, video gaming or otherwise.

In August of 2007, Morgan Webb and her husband launched WebbAlert in close collaboration with FM. It was a visionary project: a daily video blog of the day's tech news. Unfortunately, this past week, Morgan shuttered the project in order to concentrate on her other gig - G4’s video game review show X-Play.

Liz Gannes at NewTeeVee talked to Morgan about the development and she had some kind words for FM. Well, the feeling is mutual, Morgan! Thanks for a great run. We wish you the best of luck in everything you do.

Via NewTeeVee:

Morgan Webb, the TV host, gamer, and model, threw her hat in the ring for tech news video shows in August 2007, and produced the daily show WebbAlert as a side project with her husband. But the show ended its run this week, with Webb citing the increasing demands of her day job as a host for G4’s video game review show X-Play....

She declined to give financial and viewer specifics, but made it clear that she’s not quitting for lack of revenue...

Federated Media was fantastic at selling us, and I’d like to thank them for helping us do as well as we did.

For many brand marketers, social media is still an "experimental" place. Marketers seem to universally accept the promise of social media, but have yet to dedicate to it the kind of budget that other channels command. But this situation is rapidly evolving as marketers begin to regard social media as a channel on par with other digital media, and indeed, with other traditional channels like TV.

MySpace, for example, rather than competing with other social media outlets, now considers portals to be their main competition. They see themselves as competing with Yahoo, MSN and the like, for 7-figure ad deals.

Via Financial Times:

MySpace is squaring up to Yahoo and Microsoft’s MSN internet portals in an attempt to win marketing campaigns from big brands reluctant to invest large sums in social media advertising.

Jeff Berman, president of sales and marketing at MySpace, said many advertisers viewed social media campaigns as “experimental”...

“In the last six months, we have really broken out of that,” he said. “Instead of going up against other social media sites for experimental dollars that might be five- or six-figure advertising campaigns, we’re going up against the portals for seven-figure campaigns.”

For Pepsi, social media is not yet a go-to channel for their marketing efforts. But according to the BrandWeek story below, Pepsi is leveraging social media to define the messages it runs in old media. We've seen social media make its way into other areas of the business cycle including product development. Now it's being used as a de facto creative agency.

From BrandWeek:

PepsiCo today announced which ads will be running during the Super Bowl, sort of. The No. 2 cola giant has readied work for Pepsi, Pepsi Max, SoBe Lifewater and G (formerly Gatorade). However, it is hedging its bets as to which creative to run. Instead it is waiting to see which brands are getting the most buzz on the Internet, according to Massimo d’Amore, CEO, PepsiCo Americas Beverages.

“We’re following the blogosphere,” he said, in order to make “the best possible choice.” The company has vowed to be second only to Anheuser-Busch in terms of minutes purchased during the game. It only gave a range of up to four minutes of ads.

I'm very pleased to welcome Mugs Buckley to FM’s Author Services team, where she runs point for many of FM’s leading publishing partners. As we posted last week, FM has been building strategic muscle in the scaled and high-touch media executions that we believe represent the future of media, and Mugs is yet another example of our commitment to that mission. Mugs also acts as an analyst for TDG and covers the growth of digital video advertising. Formerly, Mugs served as an Interactive Sales Manager for Comcast Spotlight, a division of Comcast Corporation. She began her career at the Discovery Channel where she was the Executive Producer of Discovery's award-winning multimedia production unit. As ZDTV's (now G4) first employee, she was Director of Business Development. She served as the Vice President of Business Development for RespondTV and the Director of Business Development and PopTV for Liberate Technologies.

Mugs is an active member of the Producers Guild of America's New Media Group and a member of the Academy of Television Arts and Sciences' Interactive Media Committee (Primetime Emmys). Mugs holds a BA from Tufts University and an Ed.M. in Technology in Education from the Harvard Graduate School of Education. Welcome to FM, Mugs!

This is a fantastic illustration that delves into how the world of media and brand management has changed over the last 50 years. Though pretty basic, it's a very powerful tool for educating the few who have not yet internalized the fundamental shift we've all experienced.

Via Dave Knox's Hard Knox Life.

FM today welcomes Mixx into the family. See here for the official press release.

Mixx is "your blend of the Web" with an amazing combination of user-recommended media, online social networking and comprehensive personalization tools. They've been growing at a crazy clip for the past two years and now have 6 million unique users who congregate on the site every month.

Mashable covered a recent feature addition here. Here's some TechCrunch coverage.

Welcome to Mixx founder Chris McGill and the whole team!

Brian Monahan is Universal McCann's Global Lead for Social Media. He recently penned this piece: Gravitational Mass Media. It's a fantastic, detailed breakdown of the major forces that are driving marketers away from an "addiction to mass media" and toward "media assets."

This is a rather lengthy piece, but it's right on the money and it dovetails nicely with our philosophy and passion here at FM. In conclusion, Brian writes:

As attention becomes our most precious commodity, brands and their agents are entering the publishing business. Renting attention by inserting commodity ads in standalone media will obviously have a major role for the foreseeable future. But the relative importance of Mass Marketing will diminish as Gravitational Mass Marketers invest in media assets. Gravitational Mass Media assets yield an audience dividend that is hyper-targeted, tuned to the brand message, and provides true utility to the user. Most importantly, these capture attention at an amortized cost that is more efficient than commodity mass media advertising.

Challenging economic times force all of us to focus. At FM, our focus, now more than ever, is on what we do best - create media experiences that are valuable to our publishers, their audiences, and our brand marketing partners.

Given our journalistic heritage, we don't want to bury the lede: Today FM is restructuring parts of our business, and as a result, we are saying goodbye to a small number of our employees. Also as a result, we are adding several positions in strategic areas where we see growth in the coming year (more on that in a minute).

FM operates within a complex and evolving ecosystem consisting of independent content creators, engaged media consumers, and marketers who want join those creators and consumers in conversation. And while the economy is in deep recession - one that has left nobody unscathed – the media business is also in a historic transition from models based on mass distribution to models based on social interaction. The recession is certainly a challenge, but is also an opportunity - an opportunity to help our partners accelerate their businesses in the midst of that transition.

In the past three years FM has helped define the practice of what we call "conversational marketing." Sure, we sell banner ads, but our business quickly became more than consolidating the back office work of selling and flighting advertisements. Instead, we began working with our publishing partners to create media that did more: it engaged audiences in new ways, added value to people's lives, and in many cases, completely reinvented the concept of what "marketing" could be.

Over the past year, it became increasingly clear that the majority of our business was in the execution of these more complex media programs. So when the economy began its nose-dive last Fall, we reached out to our marketing and publishing partners to ask what they wanted from us. Most told us that they need us now more than ever. They value above all else our ability to create highly engaging, cost effective media experiences that allow marketers to connect with their customers. It's high-impact marketing, but it's also time-intensive and nuanced work. We are realigning much of our staff to support the marketers and content creators who make these programs sing by expanding our Strategic Programs and Major Accounts teams. Unfortunately, it also means that we need to lose some staff in our more traditional advertising support business.

And while we lament the loss of, and are tremendously thankful for, the work of colleagues who are leaving us, we also look forward to the opportunities ahead. We are bringing on more developers and strategic publishing talent, and in the coming weeks and months we will be announcing several new partners who will be joining us in the work that lies ahead.

Change is often difficult, but whenever possible we hope to be the instigators of that change. Armed with extraordinarily talented staff, investors, and partners, we pledge to keep our focus, and get back to the work ahead.

McCracken launched his solo site, Technologizer, last fall and he’s on track for a million pageview month in January. And the sponsors are following McCracken’s audience to the new format, too. From Min Online.

The site also seems to be a financial success, or at least a viable going concern. The site has ad support from HP, Intel, Microsoft, Sprint and Verizon. McCracken says the partnership with blog ad and media network Federated Media has been critical to the site’s success, since their staff of reps handle much of the ad sales chores. Federated Media is the brainchild of Industry Standard publisher John Battelle. Several years ago, Battelle and partners formed one of the first successful attempts to network high-profile blogs like Boing Boing and GigaOm.”

Thanks for the call out, Harry!

Lee Gomes of Forbes details the struggles of digital media in 2008 in this article published a little over a month ago (how'd I miss that?). The one bright spot in what Gomes describes as very grim year? Federated Media, of course.

From Forbes:

"This is not to say that there aren't ways that smart, elite Web sites can do well. Top-tier media properties have a special relationship with their readers that is worth something to advertisers. Federated Media, which handles ads for 150 sites, designed a special campaign for BMW that invited people to use a drawing application on Facebook to color in their cars. Some 9,000 Facebook members took part, and the campaign won accolades from Web media analysts."

Boing Boing documents what CES is all about - talking robots and small cars that you can ride in.

Truly successful social network marketing programs are tough to come by. We have several under belt here at FM and you can read about our philosophy on this here, here and here. From stand-alone branded apps, to integrated brand messaging within existing apps, everyone is trying to crack this nut.

So kudos to Burger King and Crispin Porter + Bogusky for coming up with a very innovative approach. They just launched the Whopper Sacrifice application on Facebook. Here's coverage at AdWeek. The application allows you to pick up free BK food for every 10 'friends' you sacrifice from your Facebook friends list.

This is one of the more interesting ideas we've seen from a stand-alone branded application. If you're familiar with FM, you know we judge these things by three criteria: Is it transparent? Yes. Is it authentic? Yes. Does it add value to the user's experience? Absolutely.

The one question I have is how many people will be willing to whittle down their friends list for a free burger. Many (wrongly) consider it a badge of honor to have thousands of friends even when that list is full of strangers. I'd be very interested in a complete case study when this one wraps up.

Mike Masnick of TechDirt put together a great post on the shifting media landscape and the new models emerging to compensate content creators (journalists). This is a great read. Toward the end he calls out two FM programs with Dell and AmEx as successful models for new media. Agreed, Mike, there are "tremendous new opportunities opening themselves up" indeed!

...in fact, this is part of what we believe we're able to do here at Floor64 with our Insight Community offering. Companies have been tapping into the Insight Community to generate interesting and relevant content, while ceding all editorial control to us. For example, American Express has been using Insight Community content on its own award-winning Open Forum blog discussing trends and issues related to small businesses. American Express does not have editorial control over most of the content, and the content is pretty clearly not specific to or slanted by American Express's sponsorship of the endeavor. And, as some people are noting, that blog is full of such wonderful content, that plenty of other mainstream publications, including the NY Times and the Financial Times, are noticing that such a publication really is no different than a small business trade publication now.

Except, rather than American Express having to buy ads in random small business trade publications, it gets to sponsor the whole thing -- while ceding much of the editorial control to others. Obviously, we're a bit biased here, because we believe this is a tremendously viable model, but if you read the content on that site -- or, say, the content on the Digital Nomads site, sponsored by Dell, that runs under a similar model, you can judge the quality of the content yourself -- and recognize that for all the whining and complaining about the old models going away, there are tremendous new opportunities opening themselves up, as well.

Congratulations to the FM Authors who made PC Magazine's list of its 100 favorite blogs:

• The Bargainist: "A true lifesaver in these troubled economic times."
• Boing Boing: "It's all wonderful to us."
• Boy Genius Report: "Manages to stand out in this already crowded sphere."
• Dooce: "She turned that life lemon into Internet lemonade."
• Inhabitat: "The most sustainable -- and coolest -- trends in architecture, fashion, transportation and more."
• Make: "Do-it-yourself projects for the uber-geeky."
• MetaFilter: "From tech to pop culture to politics, sometimes two sentences say it all."
• The Pioneer Woman's Cooking Section: "Seriously intense recipes, with plenty of drool-inducing photos to match."
• Silicon Alley Insider: "The ins and outs of the business side of the tech world."
• TechCrunch: "You don't know what's new in Silicon Valley unless you read TechCrunch."
• Techdirt: "Quick and to the point. That's the kind of analysis Mike Masnick brings to the big news of the day in Silicon Valley."
• Technologizer: "We're just wild about Harry. ... He and his associates hit on everything a consumer or enthusiast cares about."
• Uncrate: "For the unabashedly hard-shopping dude ... coolness, high prices and a splash of testosterone."
• WiFi Net News: "The latest in wireless networking for planes, trains and automobiles (and houses, and offices, and outside)."
• Ask A Ninja: "Where America turns for its burning Ninja-centric questions."

But this one from Brian Morrissey at AdWeek seems particularly prescient to me, and it's exactly what we at FM are seeing in the field.

...old school methods like display ads and microsites will come under pressure. Social media looks set to remain on the top of advertisers' agendas, as they look to apply the lessons of their early missteps in the area while adding real measurement to what have been experimental forays to date. As the Internet becomes more social, there will likewise be an acceleration of a move from purely technical implementations to using the Web's emerging social infrastructure to connect on a more human level.

Here are two great pieces on a question that marketers must answer before getting involved in social apps. The main question is: Do I created a branded application? Or do I engage an existing application?

To answer that question, check out the case study below from FM partner, TVLoop, and an extended piece on the subject via another FM partner, VentureBeat.

TV Loop Blog: Case Study - Delivering Engaging Advertising via Custom Trivia

As I’ve mentioned in previous posts, the key to driving engaging advertising in social media is to integrate the brand into the product so that it becomes a beneficial part of the user experience. We accomplished that goal with the Scrubs campaign by utilizing a combination of sponsored trivia and fan contests, and the result was an engaged subscriber base and a happy client.

VentureBeat: The plight of branded apps and the future of social marketing

Advertisers need to wake up and realize that an optimal environment already exists on the social web just waiting to be monetized in subtler, more intuitive ways. Not only will these strategies extend their reach by orders of magnitude and save development costs, but will ultimately be more appreciated by their prospective customers.