As I reported last week, hot ad network AdBrite laid off 40% of its sales force shortly after one of its chief VC investors warned everyone in its portfolio to start cutting costs. The start-up picture is growing bleak, especially for companies that seek Series B funding. Unless these guys have a fairly steep growth trajectory, they will have trouble making the case. The Wall Street Journal outlines the depth of the pain in a piece late last week. One startup that provides ad services to small businesses, MerchantCircle, canceled appointments with major media companies in New York and Europe. I hear similar stories from ad networks and even companies in the otherwise hot mobile sector. October was a month of many cancelled appointments and unsigned deal finalizations. WSJ summs it up this way:

“The shift is being echoed across Silicon Valley, where executives at startups—which form the foundation of the tech economy—are now deferring expansion projects, taking voluntary pay cuts, delaying hiring plans and slashing expenses. The shift is a turnabout for the region’s young companies, which have traditionally focused on go-go growth by grabbing customers early and being first to market with new technologies.”

A term we haven’t heard much since the last bubble burst, “burn rate,” is re-emerging as a measure of startup health. Plans for expansion are being frozen. And that seems to be the operative word right now. Progress in digital media innovation, may be stopped in its tracks for the next 6 to 9 months. Anyone with a plan based on ad revenue can only hold their breath while the impact of this downturn makes itself clear to the online media value chain.

VCs, often full of their own bravado, like to say that such bloodletting thins the herd of weak members. I am not sure that laissez-faire Darwinism is exactly the theme I would strike right now. The reality is that a lot of startups with solid ideas may not weather the storm because the downturn hit just when they were trying to prove the concept rather than the profitiability.

But as I have said before on this page, any media company with foresight and cash, should be looking for bargains. By March, there may be a fire sale of some good ideas.

In a very thoughtful longe-range post at the Forrester blog, analyst Laura Ramos reflects on the topic: “Will B2B Marketing Become Obsolete?” She worries that services are becoming commoditized. She worries that the digital social matrix may well replace trusted authorities. Ramos cites Forrester research that shows 36% who buy networking products and 34% who buy security solutions look to peers for advice, and word-of-mouth is the top resource in both categories. Yup. That one is chilling and should give all publishers pause. The Internet has opened up an informational resource that competes with traditional media brands on a number of levels. It not only fragments information sources across a number of new venues that are a click away. But it makes everyone seem like an expert. The task at hand for B2B publishers is not to fight the power of the social graph in the way they tried in vain to fight against the first wave of fragmentation. Pretending other sources of information don’t exist is not an answer, just as pretending Google didn’t exist didn’t work out too well for the sites that refused for so long to engage in SEO. No, the only reasonable response to this new word-of-mouth power is to craft editorial formats that embrace it and somehow confer to it the imprimature of your traditional brand. Blog networks are a step in the right direction. But perhaps we need to think harder. Maybe moderated product recommendation forums are one possibility. If the media brand can no longer be the dominant authority then it can distinguish itself by being the most trustworthy and even-handed host in a discussion that is going to happen among peers with or without the publisher’s presence. You might a swell figure out a way to be present at the table.

You betcha! Never at a loss for words, the famed designer of great 60s Esquire covers and countless ad campaigns, Lois slams the latest Esquire E-Ink cover and the Obama New Yorker cover in the first sixty seconds of this Ad Age video interview. Lois, whoc can’t seem to stop himself, claims other Hearst editors with whome he spoke are put off by the cover idea, too. Somewhere along the line he seems to take credit for David Remnick making his New Yorker covers more topical. To his credit, Lois does go on at length about the design process and how his great ideas were steeped in an understanding of great art, dance, and literature. His new book and New York show outline the ways in which his visual ideas map against great works and how a broad exposure to culture informed his work. The video is worth watching all the way through, even after the mag-bashing bravado, for more helpful insights about the state of design.

Remember when NBC digital head Beth Comstock warned everyone last year that there just isn’t enough ad money in the universe to support all of these new and free online technologies and ideas? Well, reality may finally be catching up to common sense. As Michael Learmonth reports in an excellent Ad Age piece today, cool Web 2.0 technologies are facing an ad spending contraction at just the point when their models were supposed to become viable revenue generators.  “That’s the new reality filtering down to start-ups,” write Learmonth, “If advertising was your panacea, better think of something else and quick.” Web services like Twitter or Web based applications and media sharing sites, grabbed loads of eyeballs, but in hard times the media buyers tend to stick with the tried and true. In the midst of an ad contraction, ad-based start-up models are goign to have a hard case to make in a risk-averse envrionment where brands are not in the mood to experiment with new models.

What comes of this new pressure? Three obvious things.

1. Consolidation and fire sales. Media companies with money are going to be sniffing around for bargains. Many of the Web 2.0 start-ups were good technology ideas without a standalone business model. Some specialized ad networks and social media properties may make more sense within the purview of larger media or ad agency groups.

2. The return of fee based talk. While I still believe this will be more talk than real action, we will hear once again the long lost lament that people have to start paying for Web-based content and services. Good luck with that.

3. Emerging platforms go into sleep mode. Playing with new ad platforms like mobile, podcasting, set top boxes, social networking seems a lot less urgent when surviving the next quarter is the primary worry. The “test” platforms are the first to go, or at least flatten to the point where many VC-funded entities will be force to shutter or sell.

There never was enough ad money out there to support 400 ad networks and countless social media and Web app notions anyway. Hard times have a way of dissolving fantasies that should have dissipated long ago.

With ad pages down, CPMs under pressure online, it is not as if we need even more omens of the coming digital downturn. But leading ad marketplace AdBrite laid off 40% of its workforce yesterday in order to achieve profitability without additional VC funding. This move comes on the heels of Sequoia Capital warning all its portfolio companies (AdBrite among them) that unless start ups monetize quickly they may not survive the coming downturn. The 56-slide “RIP: Good Times” presentation is now legendary in the industry for its advice that VC-funded companies not expect another round in the worsening economic environment. AdBrite has been quick to note that these cuts are not signs of weak perforamnce but a determination to achieve profitability and self fund. But in another ominous note, AdBrite executives said that it would be emphasizing the performance-based side of the business rathe rthan the previous brand emphasis. Meanwhile Google reported unxepctedly strong results last quarter, suggesting the performance-based models will be a safer haven for dwindling marketing budgets than brand strategies. This cannot bode too well for premium inventory.

For as long as I have been covering digital media (1996 to be exact) publishers chased the dream of activating local information and advertising. Newspapers, phone directories, Web upstarts like CitySearch and Microsoft Sidewalk, all tries to claim ownership of the local audience and their merchants. Yahoo and Google got into the act early in the 2000s with local search services, which have indeed become real resources for most people. It took a good decade for people to identify the Internet as a reliable source for local information. But the local ad money continues to be a challenge. Billions in marketing revenue in other media come from the mom and pop shops and independent service providers in a given market, but few of them have been particularly Web savvy. Getting local businesses to support local Internet efforts has been the target of more weird sales schemes than I can number.

And so I meet NBC ne local initiative with a grain of salt and earned cynicism. The TV network plans to convert its many local affiliate Web sites into local protals rather than extensions of the TV station. Web site with call letters and channel numbers nbow will become something like nbcboston.com and feature directory information, events listings , entertainment, social media tools, etc. ’s announcement yesterday. You can see one of the new sites here. NBC Local claims its target for these sites is the urban entrepreneur, the tech-savvy perosn who needs to be connected to community both for fun and profit.

They face an uphill battle. Even with the powerful fuel of on-air promotion, local TV sites have attracted only 6.9% of local online ad revenues, according to Borrell Associates. Yahoo and Local.com still get a majority (57.3%) and newspapers (24.6%) and directories (7.8%). The challenge TV faces in breaking into the local ad market is that people don’t think of these brands as on-demand information resources in the same way tehy do a newspaper, directory or even online search. As so many Web entities have discovered over the years, claiming a new identity online does not necessarily mean that users easily rethink a brand or a media category. I have heard some national magazine brands murmer about getting a piece of the local markets as well. They might keep in mind the fact that local ad money for now is going to the media sources people identify as task-oriented resources.

In order to get the news out yesterday about Tina Brown’s soft launch of TheDailyBeast.com, I neglected to mention the range of competitors Ms. B. takes on in this new venture. In addition to the very similar Huffington Post, Daily Beast must snarl down Google and Yahoo News as well as another old hand at media controversy, Michael Wolff. As I reported last year when it launched, Wolff’s news aggregator Newser.com leverages both high tech and editorial sensibilities. The customizable home page gives you a visual quilt of top stories where mouse clicks pop up summaries written by real humans. Much as it tries to filter and summarize, the basic structure of the site can seem overwhelming in its choices. There are more than 15 separate section options on the top line menu. The grid maintains a sense of order, but the rest of the layout almost teases you with the feeling you are missing a lot. Both HuffPo and Beast are visually more appealing and convey a better sense of filtering rather than gathering all of the Web. On the other hand, Newser does let you customize things and has a wider reach.

Like clockwork, and in rapid response to Daily Beast I am sure, Newser announced today that it had reached 1.2 million monthly uniques in September, less than a year after it first month tally of 75,000 last October. The company says it enjoyed a boost from elections and the Olympics, which it retained going into the fall.

In a statement, Wolff howled as usual about the death of old media. “Newspapers and broadcast news are in steep decline while online consumption continues to grow at a lightning pace. Newser’s fantastic growth rate proves that it is giving Web news users what they want—news on their computer screen or iPhone in an efficient, smart and pleasurable format.”Okay, but I think that with most of these sites we still are looking for the value add. Are media perosnalities like Brown, Wolff and Huffington really what differentiates the aggregators?
Who would have thought that American media would start competing over who “curates” news best rather than who actually creates it?  But as newsrooms get gutted by budget cuts and re-positioning, what will be left to curate? Back in the 30’s hard-boiled novelist James Cain’s “Postman Always Rings Twice” bemoaned a service economy where “everybody was selling hot dogs to one another.” How prescient.