Confessions of digital ad pioneer John Battelle: We got a lot of grief for the banner ad

The founders of Wired almost missed the big story.
All of us had different trajectories as to why we were fascinated with the story of technology and culture. We almost entirely missed the Internet at Wired, because it was that early. We didn’t have any stories about it. The World Wide Web as we understood it had just started happening. Imagine if we’d launched and not talked about it. I wrote a column at the end of our first production cycle. It was just offhand color that we dribbled throughout the book. In that column, I took note of this project that was starting to get people talking, and it was called the World Wide Web. It was sheer luck that we could maintain our credibility of having talked about the World Wide Web.

Then, they had to figure out how to pay for the Web.
A year and a half later we started HotWired. We brought up the question, should we charge people for the content? And we basically all agreed that was not going to work because people were already paying for their access to the Internet. We just thought that was impossible. And it was having to pay for that that we got the banner ad. We got a lot of grief for that. The first banner had like a 70 percent click-through rate.

I think for the time we were right. I think now people are willing to pay, but they have to see the benefit. And the core benefit of a great publication is membership. When you bought Wired and threw it on your coffee table, it was a declaration that you were a member of that community. It’s really hard to do a general publication digitally.

Where he sees Google going next.
Google is facing an existential crisis right now. It’s got a massive business in search advertising and programmatic advertising and video and Android. The question is, how is it going to tie all of this together in a way that adds value to the customer so it can add value to the marketer? Their core business is mature and not growing as fast. They showed a big card with the mobile-pocalypse. The idea being, we’re going to use our market power to drive all the Internet to be highly relevant, contextual and searchable in the mobile context, which serves their purpose and an ideological belief that the mobile should be more like the Web. It’s going to force a lot of publishers and service providers to think mobile-first.

On coining the term “conversational media,” a forerunner of content marketing.
I was noticing in the search environment, ads didn’t look like the content, but nobody seemed to care. It adds to the conversation. I thought about the first advertisers we had at Wired. They started to adopt the design sensibility and style and grammar of Wired. They natively understood the audience they were talking to. Therefore it worked better. That was what I was thinking — do we have that online? The answer was, no. It struck me that’s the problem we had to solve. We also abandoned the canvas for the advertiser. We did not give them the two-page spread or 30-second window to tell a story. That was a big, big mistake.

In 2007, I wrote a paper called “Conversational Marketing.” I thought marketers deserved to be equal participants in the conversation. I argued that in order for that to happen, advertising had to pass a number of tests: It added value to the audience. It had to be done at scale. We’re still trying to square that circle. Google did it first on search. Then the next platform to give you scale was Facebook with the news feed. What we haven’t really gotten to is a native ad platform that’s going to give us the virtuous circle of improvement with scale reaching the right people. Before programmatic, it was really hard to scale stuff. But I think we’re definitely getting there.

On founding ad network Federated Media in 2005, which he sold in 2014 to Texas broadcaster Lin Media for a fraction of its value, spinning out its programmatic business as Sovrn Holdings.
As a content-marketing business, it was very supportable. So was programmatic. Display at scale wasn’t doing well. We didn’t have those premium positions, and we didn’t have video. So the model we had built selling direct-sold display with content marketing as the bow on top, we couldn’t continue. The legacy of Federated is twofold. We helped to invent content marketing. And Sovrn is Federated’s legacy. We were an important contributor to all the things that are thought to be important now, like native and understanding social and helping brands do their digital marketing.

On the things he missed.
I felt pretty smart when I thought Facebook was just a platform for gaming. I kind of missed mobile. In the first two years after the iPhone launched, there were a lot of app makers that had a lot of ads. A lot of ad networks were created that were mobile only. We could have gone out and aggregated a bunch of mobile apps, but we were really about high-quality content. And the first and second generation of apps were not content apps. They were games, services. You could argue we missed that. But it wasn’t our core mission. And then Instagram broke out, and at some point, you realize the model is bigger than one company can encompass. Shit happens.