Convergence started really when content was renamed “data” and digitized. By this point, books, music, software, and even video were all being swapped digitally on the internet. Now, voice is also digital data and calls can be placed with your cable company, through internet companies, and of course, your local carrier (remind me again what they carry?)

At a broader level, this means that the same “pipe” can carry content originally intended for any output (this is the convergence part, in case you missed it). But put convergence under a microscope, and you can see that it gives consumers the ability to control how they want that output to look like, whether it’s via a big screen or a little one, a printout of a book or a podcast, and just like space isn’t an issue, neither is time, as the convergence force also conspires against content controllers to empower consumers to enjoy their content willy-nilly on their own schedules. (The scoundrels!)

But convergence doesn’t really end where media like broadcast and print converge; it implies the simultaneous divergence to any channel of content originally intended for specific channels. And when the channel no longer matters, media becomes a business of brand, not distribution; (and distribution a business of commodities (1)).

And this is the key to succeeding in a converged media universe. Sure, getting access to television, radio, internet, and phone data from a single provider who can bundle everything into a nice, neat discounted package makes economic sense, but remember that consumers are irrational and in no industry have they permitted themselves to be willingly tied to and directed by a single provider. So, before we discuss how branding will save your (content) business, let’s discuss how convergence killed it.

(The only answer for distributors of content is to keep doing what you’re already doing and offer everything to everyone; it costs you almost nothing additional — except a little marketing — and it’s already well-proven to work in growing your profit per subscriber after decades of stagnation.

In a few more years, the geographical distances between competitors that once preserved your virtual monopolies will also cease to be an obstacle to convergence, propelling your business models once again to commodity status, where service is the primary differentiator, and pricing the second.)

Why Convergence Killed Your Business

Based on an al berrios & co. analysis of industries, there are certain conditions that need to exist in order for multi-product, single-source business models to fail. One of these conditions is that the products they’re offering, which were previously unrelated, somehow standardize. The other condition is that once standardized, end users have to be able to enjoy them at near-zero or zero-cost (including switching costs) and without loss of (intrinsic) value. And once these conditions are met, they are irreversible.

(Despite media executives’ beliefs, anonymity during consumption isn’t necessarily a condition in order for someone to exploit your product offerings.)

In the travel and tourism industry, the more you fly, lodge, or even spend on credit, the more miles you rack up until you get upgrades and all sorts of free goodies. Because your “spending points” are convertible to miles, then actual, tangible services, travel services no longer possess the same value they used to when they were purchasable exclusively with cash.

Consequently, the travel industry has unintentionally standardized their services by allowing consumers to pay for them with miles, while simultaneously, they’ve let consumers enjoy them at near-zero or zero cost. (Due to the personal “asset-like” nature of miles and points, I can now buy tens of thousands of airline miles at auction sites from others travelers for a couple of hundred bucks, never having actually earned them to use them.)

When banks, stock brokerages, and insurance companies converged in the late 90s, it was hailed as the birth of the financial supermarket, where every conceivable financial product could easily be peddled from a teller’s window. What? Financial groceries? Yea right!

Traditional banner ads are becoming delivery systems for content and promotional material. Click-to-play video ads can turn an ad banner into a video channel. Click-to-call ads can turn an ad banner into a sales or support center by putting a person in voice communication with a sales rep or support person almost instantaneously. And there are interactive banners that serve as miniature Web applications like the ones from Chitika that turn ad space into mini online retail platforms, complete with product descriptions, reviews, search, and comparison shopping.

It’s a mistake to ignore the blurring lines. Ad creators who stick strictly with traditional banners, even if those banners are finely targeted by contextual or behavioral systems, will be left in the dust by those who innovate. I suppose it’s natural to fixate on an advertising mechanism that works in the here and now. And I suppose we’ll always have banners, but creative advertisers, publishers, and marketers won’t be able to avoid the eventual merging of what we take to be advertising with what we take to be content.

Take the new PayPerPost service. Some would consider it sleazy or spammish for advertisers to pay bloggers for editorial content, but that’s beside the point here. Are PayPerPost blog posts something you could consider content? You could, but PayPerPost content is written to specifically promote a product or service. So is it marketing? You’d think so, but you pay for a blogger to write a specific post in the same way you would hire a creative agency to create an advertisement. It’s also organized like an advertising network. So is it advertising? Maybe.

Sooner or later, someone’s going to come along with a great new idea and create a revolution that results in a new way of selling ideas and brand images online. After all, advertising isn’t about selling products. It’s about selling ideas. And while it’s great that we have new ways of tracking and targeting advertisements through click, impressions, timeshares, and whatnot, in the end, the customer doesn’t care. The customer cares about the customer. They want to know, “Will that product or service you’re hawking make my life easier/better/safer?” And if it won’t, then “You’d better not spam me again, spammer!” Customers don’t care if you’re being paid per-click, per-impression, or per-diem.

On the one hand, it’s dishonest to pass off advertising as content. Besides, website visitors are usually smart enough to tell the difference between honest content and stuff that’s been polished-up and oversold by a PR person. That’s cheesy. The blending of content and advertising I’m talking about is much more subtle. In the future, customers may visit a site for the advertising. It’s like corporate blogging. I like cars, and I occasionally read GM’s Fastlane blog. I go there for the content. But that content is about GM cars, and will invariably promote GM products.

There are two problems that the creative online ad revolutionist has to overcome. The first is the network. A unique one-shot ad campaign may make a splash, but it will never start a revolution unless it’s connected to a system that will let advertisers and publishers collaborate on similar campaigns ad infinitum. If there is a network structure in place, not only can the methodology of this (currently) fictitious future ad platform spread to many different advertisers and publishers, but it will also prove that such a platform can regularly generate income for publishers and ROI for advertisers.

The second problem is one of disclosure. One of the most distinctive things that makes advertising advertising is the fact that an ad is easily identified as such. When advertising and content are blended together, a website visitor needs to be able to tell the difference between promotional content and journalistic content. It’s all about trust.

A reader needs to know if there is a conflict of interest when they read or view something online. Usually it’s obvious, as with PR-style writing or blatant product placement. But when the smooth convergence between advertising and content happens, people will become confused if there is no way to tell one from another, and ultimately develop mistrust for all sites that use such a system.

However it happens, ad and content convergence will be something that people have never seen before. Not on TV. Not in print. It’s a shame that a lot of advertisers and publishers still refer to ads as if they were just another static object to place on a Web page. The question most advertisers and publishers need to be asking themselves is if they are prepared for when convergence comes.

It started way back with the evangelizing of online reporting measurement like impressions, and CTR as the major differentiator from offline, then many new ideas and technologies found legs like contextual marketing, behavioral, incentives or not, rich media, auction marketplaces, and now the latest savior and craze is video.

I started my career working in local television as a marketing promotions director and over time did news documentaries, commercials, and on-air promotions. The TV industry has a way of snowing the average person into thinking that it’s a glamorous business full of stars, excitement and innovation. In many respects, TV is actually a very formulaic industry that has tried-and-true methods on how to create content, advertising and achieve promotion. I won’t bore you with all the details of these formulas, but television started just like online as the wild west and has become a mature successful industry with little innovation because the formula’s work, most of the time. Enter online advertising and content.

There’s been talk over the years by many industry prophets about convergence of all the medias. We’ve heard about how the cable companies are going to become phone companies, now happening, ie, Time Warner. Also, about how the software companies are going to become content creators, now happening, ie, MSN. How television is going to become interactive, now happening with digital cable and integration of web sites.

Even how cell phone companies will become media companies, definitely happening, ie, Verizon mobile is now pushing music phones. The fusion is on its way and one small chapter is about to be written in this story about how television advertising fused with online content to create value. I suspect it’s not going to go the way most are expecting.

The chapter has just started to be written with Google, Yahoo, MSN, AOL and popular sites like MySpace and YouTube are jumping on the mount integrating television commercials into existing content structures. In most cases it’s very crude and functional, but since we’re still early in the process the WOW factor is still there. I’m familiar with the commercial television industry and this low level of integration won’t be acceptable too much longer. Nor will high cpms for essentially an unemotional passive experience with no interaction as promised by online advertising. That’s the negative and I’m sorry to rain on the parade so early, however there is a big positive.

The gift of online is interactivity and the value of video is its emotional appeal and impact on our senses. Blending the two is very easy and can in fact be integrated into video clips. Yes, it is perfectly possible to produce unique video commercials, or even repurpose old ones, and layer interactivity on top of them. Maybe as you watch a BMW commercial you could click on the car and a menu of available colors becomes available to choose from to see the car race along that rugged canyon highway in your favorite color instead of the default one.

Maybe those cool Apple commercials where you have the metaphorical Microsoft guy and Apple guy making fun of each other could be completely interactive where you could make up new scripts for them to say as you consider the differences between the brands, type it in and they repeat it and you could virally send it to a friend. Interactive video is very powerful and has the ability to create real engagement.

There’s no limit to the interactive options and commercials will move from being passively watched experiences to fully engaged interactive ones. The most exciting part of this is the full ability to track each move and selection accordingly. The quantity of behavioral information to be learned from an interactive commercial is incredible and far more exciting than what’s happening today with static video commercials. Knowing what someone choose to watch, rewind, click on, or create within a commercial can tell many stories about their interests and also about the strengths of the commercial itself.

There’s no doubt that video will be the next proclaimed messiah of online advertising for some time to come. Video networks will pop up, agencies will become proclaimed experts on video repurposing, and sites will integrate square video players all over. It’s inevitable and a necessary next baby step. The real fun begins when true convergence of interactivity, video and tracking really start to integrate into content. That’s what I’m looking forward to.

Of the 366 18-30-year old respondents in the survey- conducted in early November – 35% of first-time vehicle buyers consider the Internet to be their most important informational tool, compared to 8.2 percent for television, 4.4 percent for magazines, 3.6 percent for newspapers and 1.1 percent for radio.

“First-time buyers’ dependence on Web-based media validates the need for an aggressive interactive strategy to court them on the manufacturer and retail level,” said Lonnie Miller, managing director for the Polk Center for Automotive Studies, in a statement. “The Internet’s relevance in the 18-30 year age group has reached critical mass and is completely reconfiguring how car companies need to reach out to first-time buyers.”

Miller also predicts that emerging technologies such as radio podcasts and video-on-demand will create new marketing opportunities as increased bandwidth creates a convergence of cell phones, PDAs, Internet and broadcast tools — all necessities for Generation Y.

“Harnessing mobile media technology will be the automotive industry’s most important marketing challenge — and opportunity — in the next decade,” Miller adds. “Generation Y is tuning out traditional advertising, and watching what they want, when they want. Creating breakthrough content and developing relationships with customers through emerging media technologies will separate the winners from the losers in the next five years.”