The Beautiful Life will air five episodes on YouTube – and if it's popular enough, it could live on. Photo: Jan Thijs / The CW.

We know that the Internet can build a TV show’s buzz, and sometimes even keep it from getting canceled. But can it bring one back from the dead?

We’ll soon find out: A recently canceled show has come to YouTube.

The Beautiful Life, a drama about the New York modeling scene, met a swift end on the CW early this season. The show had the misfortune of going head-to-head with Glee, the Golden Globe-nominated breakout hit on Fox, which competes for the same young demographic. After managing just 1.4 million viewers for its first episode and 1.1 million for its second, the CW gave The Beautiful Life the ax.

But here’s the twist: One of the show’s producers is Ashton Kutcher, a.k.a. the most popular guy on Twitter. (He has 4.1 million followers.)

Kutcher is determined to bring the show back. It helps that he’s more connected than the average producer, and those connections have given The Beautiful Life another shot at, well, life. With some funding from Hewlett-Packard (HPQ) and distribution help from YouTube (GOOG), Kutcher’s Katalyst Media plans to post a total of five episodes of The Beautiful Life online and keep them there for six months. (Three episodes are up already, with two more coming next week.) If the show draws enough engaged viewers, it could live on – either as an online-only show or back on TV.

“We spend months if not years on a product. We put it out on the television, we let the viewers vote, we get our ratings. If it doesn’t work, we throw it away and start over with something completely different as opposed to tinkering and tweaking and changing the program,” Karey Burke, head of television for Katalyst, told FORTUNE. “What’s exciting is to think about taking a program like this that has a very short shelf life and giving a chance for the brand to live.”

Why did HP underwrite the project? Larry Nelson, HP’s director of digital strategy, said the non-traditional approach is a good fit with HP’s technology brand – and HP is already spending half of its marketing budget on digital. It helped that HP was launching its “Create Change” program that allows shoppers to donate 4% of the purchase price to a charity when they buy directly from HP.com – The Beautiful Life offers HP a chance to see whether it can get fans of a broadcast-quality online show to buy HP products, visit HP websites and generally engage with the HP brand.

If HP can figure out how to make all that happen, it’ll be a beautiful thing.

Their battles on air and in court somehow managed to lift both their reputations

Click to enlarge. Source: You Gov's BrandIndex

In politics, mudslinging tends to sully both the slinger and slimed. But according to a YouGov BrandIndex survey released Monday, the ad wars this fall between Verizon (VZ) and AT&T (T) had the opposite effect.

As you may recall, Verizon went after AT&T and Apple's (AAPL) iPhone with a series of high-profile "There's a Map for That" ads that cut so close to the bone AT&T asked a federal court in Atlanta to issue a restraining order. (The court declined and the suits were ultimately withdrawn.)

Rather than diminishing the companies in the eyes of consumers, however, the contretemps actually raised awareness of both brands, Verizon somewhat more than AT&T.

On Nov. 2, according to the BrandIndex survey, 37.1% of all adults 18 to 34 had heard something about the Verizon Wireless brand; by Dec. 7, that number was 62.2%. For AT&T the numbers went from 41.2% in early November to 54.5% last week.

Verizon Wireless' awareness passed AT&T's in the last week of November.

BrandIndex says it interviews 5,000 people each weekday from an online panel of more than 1.5 million Americans. Their scores range from -100 to 100 and are calculated by subtracting negative feedback from positive. The margin of error is +/- 2%.

See also:

• Verizon to AT&T: The truth hurts
• Verizon vs. AT&T: There's a map for that

[Follow Philip Elmer-DeWitt on Twitter @philiped]

Going after AT&T's network and Apple's iPhone could prove an expensive proposition

Source: Motorola

Broadpoint AmTech analyst Mark McKechnie's estimate that Motorola (MOT) sold 100,000 Droid smartphones last weekend has been getting a lot of attention, although nobody's quite sure what to make of it. McKechnie called the number "encouraging." Nielsen's Roger Entner found it "a little troubling." IDC's Ramon Llama said it was "nothing to shrug off."

Part of the problem is that everybody is comparing Motorola to Apple (AAPL), which sold 270,000 iPhones in its first two days of sales in 2007 and 1 million iPhone 3GSs in three days last June. The consensus on the Street is that Motorola will do well to sell 1 million Droids by the end of the year.

The other problem — and the reason Nielsen's Entner is so troubled — is that the ground had been softened for the Droid by a carpet-bombing ad campaign, the biggest in Verizon's (VZ) history. According to Ad Age's Rita Chang, the carrier has budgeted $100 million to support the Droid, most of it to be spent before the end of the year.

You can do the math.

How can Verizon afford to spend $100 per sale for a $199 (after $100 rebate) phone it is already subsidizing to the tune of hundreds of dollars apiece?

Source: AT&T

My theory is that the real purpose of Verizon's campaign is not to attack the iPhone or even to sell Droids. The carrier's true enemy is AT&T (T), to which it has been hemorrhaging subscriber share ever since the iPhone arrived.

Note that the iPhone only appears briefly in the "there's a map for that" TV ads that targeted AT&T's nationwide coverage. Verizon's latest TV campaign is even gentler, as if the iPhone could leave the island of misfit toys if it only had a better 3G network.

"Makes sense if you want the iPhone to be on your shelves one day," says a former advertising executive who watches Apple closely. "Push the Droid (without comparing it to the iPhone), but push your network as better than AT&T, and hope you gain enough traction with it to help persuade Cupertino that coming on board would be a good thing."

The contract that made AT&T the iPhone's exclusive U.S. carrier is reported to be expiring in 2010. According to AppleInsider, Apple has already signed up Taiwanese suppliers to build a hybrid "worldmode" iPhone that would run on Verizon's network.

[Follow Philip Elmer-DeWitt on Twitter @philiped]

Deal for AdMob accelerates scramble for a whopping $416 million in revenue.

As was trumpeted across the Internet Monday, Google (GOOG) is buying mobile display advertising startup AdMob for $750 million in (increasingly) precious Google stock. Wall Street digested the news and sent Google stock up almost $11.

Citi analyst Mark Mahaney says the deal “makes sense, because Google is moving aggressively to take advantage of the strong growth opportunity in mobile, which is fueled by smartphones.” Sandeep Aggarwal at Collins Stewart likes the deal, arguing “mobile advertising will be a $4 billion revenue opportunity by 2012-2013.”

Over my dead BlackBerry.

OK, I am in agreement that the whole smartphone movement is big, really big. But the ads on them? They are small, really small. In its own FAQ on the deal, Google brass acknowledge that mobile advertising is pint-sized today. They cite a number from eMarketer that pegs spending on mobile advertising at $416 million in 2009. That compares to the nearly $24 billion spent overall on online advertising.

It is true that $416 million ain’t chump-change, but it’s not Google dollars either. Estimates for AdMob’s gross revenue are in the neighborhood of $50 to 75 million, with a net of around $20 million. That is tiny, but presumably it will grow fast once AdMob’s display ads and universe of publishers and advertisers can plug into Google’s AdSense. But let’s get back to that small thing.

If you think online display ads are at best an annoyance on a 30-inch monitor, what about a three-inch screen? Ignoring ads on a PC is easy enough; on something I pay $60 or $80 a month for (especially if serving up the mobile ads slow my wireless network even more) ignoring the ads will be the default mode. Yes, there will be location-based bells and whistles to go along with the mobile ads — 30% off a ham sandwich and shoe-repair 30 feet from where you are standing — but that is still a ways off, and do you really want mobile coupons? Mobile advertising has been one of those things that gets promised year after year, and never seems to quite materialize (sort of like true broadband in the United States).

The mobile Internet is happening, and fast, the iPhone has shown us that. Whether an advertising experience works well enough on smartphones to really move the needle (and not simply cannibalize the non-mobile online ad world) remains to be seen.

Google: Buy vs. build

And by the way, Google knows how big this mobile Internet thing is going to be. Why couldn’t they figure it out, and save the $750 million? They have buildings filled with very smart people, and a good culture of “rolling their own,” as it were. I guess if your stock is up 83% since the beginning of the year you don’t have to sweat that too much.

Respect to AdMob for getting this deal done (barring any regulatory issues). Big ups to Sequoia Capital, Accel Partners and Draper Fisher Jurvetson who will make a bundle on the acquisition (and LiveOps CEO Maynard Webb who invested his own eBay money in AdMob). AdMob is clearly running fastest in this new mobile advertising world, and Google has the money to pull them off the startup track and install their 140 employees at the Googleplex. It seems there are plenty of Odwalla smoothies to go around, but I wonder, when will the big mobile advertising dollars arrive?

—

By Jon Fortt, senior writer

AdMob CEO Omar Hamoui doesn’t take himself too seriously. When I had lunch with him recently and he eyed the gourmet burgers on the menu, he had no qualms about asking one of his employees what aioli is. (It’s garlic mayonnaise.)

He shrugged and explained that he usually grabs a cheap sandwich, so he’s not used to the cloth napkin fare.

Hamoui’s easygoing manner shows in other areas. He doesn’t have an office in AdMob’s modest San Mateo headquarters — in fact, he doesn’t even have a cubicle. He works at one end of a row of computers, shoulder-to-shoulder with other engineers.

As you’ve read above, my colleague Michael Copeland is a bit down on Google’s decision to purchase AdMob for $750 million. Let me quickly offer another view. I think the AdMob deal is both a great business move and a signal that Hamoui can still fit in at Google — because the search giant is levelheaded enough to swallow its pride when it matters.

Let me explain. AdMob’s approach to mobile advertising is starkly different from Google’s. While Google has tried to squeeze its wildly successful PC-centric advertising onto the phone, AdMob has built a custom system that treats the phone as a unique sort of device. The differences between Google and AdMob were more than academic; they sometimes led to flare-ups between two passionate competitors. (Kind of like Copeland and me.)

A couple of sparks actually flew at Fortune’s Brainstorm Tech conference this past July. During my “Future of Mobile” breakfast roundtable, Google engineering VP Vic Gundotra argued that Google’s approach to mobile ads was superior. Hamoui listened quietly before offering a rebuttal. But in the audience, under his breath, AdMob executive Jason Spero used some colorful language to inform his neighbors that Google was full of it.

Right after breakfast, Gundotra confronted Spero. A Google employee nearby had picked up Spero's comments on her audio recorder, he said — and he casually suggested that if the recording ended up online, it could make AdMob look pretty bad. The clear implication: Watch what you say about us.

Less than four months later, bygones are bygones. Google executives realized AdMob is better positioned in the must-win mobile market, and decided to pay up before AdMob gets even more expensive — or worse, gets acquired by Microsoft (MSFT) or Yahoo (YHOO).

Sure, you could look at this as evidence of a problem. You could argue that Google has an expensive habit of failing to build the best products in new markets like online video and mobile ads, and getting outsmarted by spry startups.

But here’s another take: Google knows how to pick its battles. CEO Eric Schmidt has openly declared that mobile advertising is a key piece of his growth strategy, with the potential to be as big as Google’s core PC-based business. If Schmidt believes that, it doesn’t matter that AdMob’s revenues are small today — what matters is that AdMob has the right people and the right technology to win in mobile.

Those Get-a-Mac spots aren't cheap, but they deliver a lot of bang for the buck

Photo: Apple Inc..

Apple (AAPL) shells out a ton of money for advertising. In fiscal 2009 it spent $501 million, according to the 10-K form filed Tuesday. That's up from $486 million in 2008 and $467 million in 2007.

But half a billion doesn't seem like so much when it's compared with the $1.4 billion Microsoft (MSFT) spent in fiscal 2009, or the $811 million Dell (DELL) spent on ads I can't remember ever seeing.

In fact, as a percentage of revenue, Apple has actually been decreasing its ad spending every year for the past eight, from nearly 5% in 2001 to 1.37%  today (1.17% if you use non-GAAP revenue). That's less than half the 3.6% of revenue Research in Motion (RIMM) spends advertising BlackBerries. (See chart below.)

Most recent fiscal year. Source: Company reports

Yet even if you despise Apple and never use their products, you tend to remember their ads. How does Apple get so much bang from its marketing buck?

I can think of five reasons:

1. The ads are memorable. Apple spends its money on creative, producing a few clever ads rather than a lot of forgettable ones. Those Get-a-Mac ads are marketing events in their own right, picked up on YouTube and re-played again and again at no extra cost to Apple.
2. The ads are well-placed. Apple pays a steep premium to be seen during the World Series or on the back of glossy magazines, but it stays away from the low-cost media where its competitors pour so many of their ad dollars, either directly or through co-op ads. You don't see AT&T (T) advertising the iPhone in newspaper fliers, for example. "Apple doesn't want anyone else promoting its products," says Financial Alchemist's Turley Muller, "just because it is so meticulous and Martha Stewart about marketing and positioning."
3. The Apple brand speaks for itself. In Interbrand's 2009 report, Apple was the 20th most recognizable brand name in the world, up there with Coca Cola, IBM and McDonalds. "The Apple brand is the most supported within its industry," according to Interbrand, "and among the most iconic of relatively young brands in the world."
4. Apple Stores are their own best advertisement. Sales per store at those 273 retail outlets was down this year ($25.9 million per store vs. $29.9 million in 2008), but traffic was up — to 45.9 million visitors in the fourth quarter alone. How many of those shoppers — bathed in hip music, surrounded by slick Apple products, coddled by preternaturally helpful staffers — left with their reality permanently distorted?
5. Word of mouth. While Apple's rating on the American Consumer Satisfaction Index was down 1.2 points this year, that was still 9 to 10 points above its nearest competitors. Apple users tend to be intensely, zealously loyal, and they do the company's evangelical work for free.

Apple spends a ton on advertising. But it seems to be money well spent.

[Follow Philip Elmer-DeWitt on Twitter @philiped]

Celebrating Microsoft's big day with a store opening and three new Get-a-Mac ads

Image: Apple Inc.

In the long running battle between Apple (AAPL) and Microsoft (MSFT), Thursday was a huge win for the boys from Redmond.

Windows 7 launched without a visible hitch and generated more positive reviews than we could count (a Google News search turned up 3,281, but we haven't read them all.)

Meanwhile, in Scottsdale, Ariz., the opening of the first Microsoft retail store delivered the kind of publicity coup money can't buy: customers camping out all night and a crowd the next morning estimated at 500.

Which brings us to our videos. The first shows Microsoft doing its best imitation of an Apple Store opening, complete with employees in multi-colored T-shirts hollering, clapping and giving high-fives.

The other three are Apple's response to all the hoopla: three snarky Get-a-Mac ads trying to turn the event into an opportunity to grab a few more points of market share.

Let's go to the videotape.

From Scottsdale:

From the Yankees-Angels game and NBC's Must-See TV:

[Follow Philip Elmer-DeWitt on Twitter @philiped]

Video: RockBandit

UPDATE: Since this was posted, AT&T has sued Verizon in a U.S. District Court, claiming false advertising and petitioning for restraining orders that would keep this ad off the air. See here.

- – - -

Borrowing a line from Apple's (AAPL) "There's an app for that" TV ad campaign, Verizon (VZ) launched a high-profile attack on rival AT&T (T) last night in the middle of Monday Night Football's Viking-Packer game.

"If you want to know why some people have spotty 3G coverage," goes the voice over, as a scruffy-looking character frowns at his iPhone. "There’s a map for that."

A YouTube version of the ad — captured, ironically, on an iPhone 3GS — is pasted below the fold.

The campaign begins at a moment of high drama in the smartphone wars. It was launched on the eve of a Tuesday morning press conference at which Verizon discussed its plans to compete against Apple with devices running Google's (GOOG) Android operating system. (See here.)

And it follows both a new wave of complaints about AT&T's sluggish service and a widely-read estimate by Morgan Stanley that if Apple were to sell the iPhone through both AT&T and Verizon, its share of the U.S. handset market could rise from less than 5% today to more than 12%. (See here.)

Below: Verizon's new TV ad.

See also:

• Google and Verizon go after Apple

Large advertisers are starting to shift their ad budgets to online video. Is the demise of broadcast television at hand?

By Jason Glickman, CEO, Tremor Media

Glickman: online video ads are on the verge of the big time. Photo: Tremor Media

At the 61^st Primetime Emmy Awards this week, television actors were full of quips about the demise of their medium: “Amy [Poehler] and I are honored to be presenting on the last official year of network broadcast television,” joked sitcom star Julia Louis-Dreyfus.  The subtext: Online video, among other things, is killing broadcast and cable networks by siphoning away eyeballs – and advertising dollars.

Despite the jocular talk of doom and gloom on the Emmys, the apocalypse of television isn’t upon us. Yes, online video has garnered enormous buzz – and venture investment dollars – but the medium has yet to secure much more than a sliver of the $65 – $70 billion advertisers spend annually on television spots.

Until now.

Now I would not be so bold as to call “time of death” on the television model. In fact, with all due respect to Julia Louis-Dreyfus, I think reports of TV’s death are greatly exaggerated. Viewership is as high as it’s ever been and the medium will (and should) receive the lion’s share of advertising dollars now and in the near to mid-term future.

But I do believe that when we look back years from now, the period starting from the third quarter of 2009 to the first quarter of 2010 will be remembered as the turning point for online video advertising.

The future is now for online video ads

It will prove to be the period when large brand advertisers began paying real attention to the medium, and it will be the beginning of online video’s aggressive 5-year climb to the highest level of the food chain in the media mix.

There are already visible signs that this is occurring. We are seeing large brand advertisers planning seven-figure online video buys on a more regular basis than ever before. The marketers use television planning rationales and pricing terminology. Several advertisers and agencies are also launching research initiatives aimed to draw a closer apples-to-apples comparison between online video and television effectiveness/engagement. The goal: to see if brands can justify significant increases to their online video ad spending in the years to come. Big changes are clearly coming.

Some of the driving forces that are currently at play that will influence this shift include:

• Scale: The audience for online video is growing large enough to grab marketers’ attention. According to Comscore, 158 million US internet users watched 21.4 billion videos in July – a record month.  In order to shift dollars from proven offline models, this validation of critical mass of user behavior and time spent is required to capture significant dollars and move past the label of an experimental medium.
• Professional Content: Until recently, there has been a misperception amongst major marketers that online video content was almost entirely made up of user-generated clips that were unsuitable for branding focused advertisements. This fear of being associated with inappropriate content kept most advertisers at bay. The tide has changed however, as major media properties have begun to distribute their professional content and show that scale does exists in this area. Companies like Hulu have taken off and deliver hundreds of millions of professional content streams per month. Video ad networks have aggregated premium professional video impressions from hundreds of sites, and even Youtube has begun to promote its professional content as a home for large brand dollars. This trend will only continue and as a result the budgets are unlocking.
• Innovation: Not to be lost in this equation are the inherent differences from the television model that online video brings to the table, particularly from a technology standpoint. The ability to target individual users based on their demographic or behavior, combined with real-time reporting on user engagement gives online video a major edge. Just as important is online video’s ability to introduce new video ad formats that go far beyond the standard 30-second spot.

This is just the tip of the iceberg for this conversation. While I would classify this period we’re in as the tipping point for the industry, the hard part for online video advertising has only just begun.

As budgets begin to shift more aggressively, the standards and rules of engagement need to mature at the same pace. The rates for online video will also need to evolve to be more comparable to those of television; for many opportunities (like video ad networks) this has already occurred, but it is not yet universal across all video publishers.

Stay tuned

There is much more to be written on what the online video industry needs to change and the developments that need to materialize in the coming years to best capitalize on the opportunity…but alas that is for another post. If nothing else, this space (and particularly the next 2-3 quarters) will be very exciting to watch for anyone who is passionate about the evolution of media.

Glickman is CEO of New York-based Tremor Media, an online video advertising network and technology platform that places in-banner and in-stream video advertising on more than 1,400 sites.

Image: Apple Inc.

Every Wednesday, Lee Clow, creative director of Apple's ad agency TBWA/Chiat/Day, flies from Los Angeles to Cupertino to meet with Steve Jobs, a weekly get-together that's been going on for years.

Meanwhile, in Redmond, Wash., Steve Ballmer barges into the office of Mich Mathews, head of Microsoft's central marketing group, giving her high fives and shouting again and again "I'm a PC!"

Those are two of the scenes Devin Leonard re-creates for the New York Sunday Times business section in "Hey, PC, Who Taught You to Fight Back?" a 3,000-word feature that may be the best thing written to date about the competition between Apple (AAPL) and Microsoft (MSFT) unfolding on our TV screens.

"It’s an ad war," writes Leonard, "one destined to go down in history with the cola wars of the 1980s and ’90s and the Hertz-Avis feud of the 1960s."

Among the highlights of Leonard's story:

• 

  Source: The New York Times

  According to TNS Media Intelligence, Apple spent $264 million on television ads in 2008, 71% more than Microsoft. In the first six months of 2009, however, Microsoft responded with $163 million worth of commercials, more than twice Apple’s spending.

• The Get a Mac campaign had been ridiculing Microsoft for a year before Ballmer decided he needed to strike back, barging into Mathews' office to give her the green light. In Feb. 2008 Microsoft picked Crispin Porter & Bogusky, best known for its cheeky Burger King ads, to lead the campaign.
• Bob Reilly, Crispin Porter's executive creative director, was initially apprehensive. He didn’t even own a PC; he worked on a MacBook Air. (He has since bought himself two PCs — a Sony Vaio and a Lenovo ThinkPad.)
• Advertising is not part of Microsoft’s DNA. Bill Gates, “never really seemed to get marketing.” Case in point: "The Wow is Now" campaign for Vista. "It was a bad product," says Jeff Musser, a former McCann Erickson creative director who worked on the Vista campaign. "I didn’t really hear anybody saying, ‘Wow.’ ”
• There were also cultural issues at Microsoft. On Madison Ave., they say that the more hands that touch an advertisement, the worse it becomes. Microsoft felt differently. “They thought the more people saw it and gave an opinion, the better it would be,” Mr. Musser said. “That’s how you develop software. It’s not how you develop great creative.”
• At first, Crispin Porter was reluctant to attack Apple, but that changed last summer. "As the tone of their campaign became more and more negative, we were like, 'We gotta do something,'" Mr. Reilly said. 'That’s where the whole notion of ‘I’m a PC’ and putting a face on our users came about. We have a billion users. That’s who our cast is, whereas Apple is just two fictitious characters.”
• The war is heating up again. After a three-month hiatus, Apple launched three new ads last week to accompany the arrival of Snow Leopard. The launch of Windows 7 in late October will be preceded by another Crispin Porter ad blitz.

You can read the full piece here.

See also:

• Apple taps "Puddy" to attack Windows 7
• How Microsoft put Apple owners on the defensive
• All about Microsoft's 'Lauren'