Web media are currently undergoing rapid developments and changes. User-Generated media has brought web publishing to the mainstream through social nets, wikis and blogs. Web distribution is also undergoing many improvements through the uses of standards, feeds, aggregation technologies which enable data portability.
The Web Video revolution has only begun to rear its head via User-uploaded content. Slowly, longer format movies and television networks are migrating over to the net. The availability of hardware to synch large televisions with web video, as well as a competitive market of media networks to choose from will soon change the fabric of advertising in a fundamental way.
Most consumers simply look forward to ending the days of television by appointment and eagerly await the incresed availility of their favorite television shows. The next phase will involve even larger libraries of on-demand media bypassing the need to worry about deciding what to pre-record; more and more networks will offer services to retroactively access anything ever released.
This won’t just be a treat for viewers. Another huge impact is the improved viability of niche programming. With a distribution model offering more choices, dedicated fans will appreciate the new choice, and will continue to demand this as part of their media intake.
The way advertisements will be placed on an active network such as the internet will be greatly improved to the mass broadcasting of today. Individual users will segment themselves based on their overall viewing habits, not just the show they are currently watching. Other data such as their web searches, favorite web sites, and their newsletters and social groups can be a part of determining what advertisements to show to them.
In the future, web video advertisements will be highly interactive, often allowing someone to interrupt their show and buy something, or find out the answer to some pop trivia question. Since engagement to the advertisment can be measured on an individual basis, this can form the basis for intelligent targeting.
Intelligent targeting not only makes niche media thrive, but it will also allow niche advertisers to step into TV advertising. Instead of being “too expensive”, due to the obvious large block-negotiated deals of the past, web video advertising will develop aspects beyond upfront and mass buying, and will be more about performace rather than scale.
The way this will change the advertising business will be monumental. Currently, most media buying agencies are controlled by one of 4 or 5 large conglomerates. This is because scale of purchasing power became one of the determining factors in an agency’s viability. In the new environment, it’s no longer just about the rate you get on a series of shots in the dark. It’s about what return you get.
Beware; we’re probably in for a whole lot of product advertising, and direct call-to-action, drop-that-remote kind of advertising. It’s only natural as the medium matures.
Almost all magazine advertisements convey means to purchase a product or find more information – they all have a clear call to action. Watching Tiger Woods bounce a golf ball repeatedly on his club seems less about reminding me I might need new sneakers, and more about reminding me of the mass perception of the brands I choose when I may need those sneakers. Today, they only actually talk about the product when they get desperate, like, when Tiger Woods talks about his appreciation for the new Buick minivan.
The combination of the rich video and personalized web media available from social networks and studios along with syndication and aggregation advances create a great deal of opportunity in web publishing.
What does this mean for the domain owners, or owners of domain monetization services?
I believe that question is best answered by another question. Why hasn’t the Web 2.0 hype resulted in any new data services that compete with Web 1.0 sites like Craigslist?
The reason is that the web hasn’t learned the Web 2.0 lesson.
Some gizmo guys tried to hijack Web 2.0 to be only about AJAX and pretty new ways of designing pages. True, modular web design is an important component of aggregated media, but it missed the boat by a long shot. I recall Internet Retailer even placed podcasting under the Web 2.0 umbrella. The ‘real’ revolution of Web 2.0, which makes it a disctinct term from Social Media, is the distribution mechanism. The blogosphere is the only major index that makes use of Web 2.0 distribution via RSS feeds. The process from the blog writer, the blog burner, the blog aggretor and the blog / news reader can be applied to any media format, but, most people missed the Web 2.0 lesson. Will domain investors realize the true potential of syndicated media?
While most bloggers have either chosen a narrow view of Web 2.0, or have denounced the term as entirely without meaning, I believe there is a true lesson to be learned.
The most fundamental way I can describe it is that Web 1.0 was a Read medium. Web 2.0 as a Read / Write medium, enabling user-feedback. The logical extension for those familiar with filesystem permission is the Read / Write / Execute, the metaphorical, Web 3.0. This begins to evolve into the Semantic Web, where instead of searching for keyword symbols, and only sorting the most popular web sites to the front, we can retrieve information in more nuianced ways that make use of existing conceptualizations to improve results. There will be no search engine spam unless you specifically request it. There will be more ways to sort your results. More importantly, you will know why the results are sorted in the way they are. This will help users make more meaningful indexes of content.
So, the semantic web is approaching, and it promises turn-key access to aggregated media. The only thing that is left to be figured out are the licensing agreements to the content that will power the media.
Many prominant domainers have commented that one of the most natural ways for domain owners to form relationships with advertisers of their niche is to form groups and have those groups network with existing magazine publishers. Frank Schilling commented that he sees media companies acquiring or merging with domain channel conglomerates.
All of these things are just ideas though, and their execution depends not on intellectual break-throughs, but by business acumen and trust busting.
Instead of domain owners being allowed to optimize the revenue from their domain by utilizing the lifetime value of their visitor, or even just by showing a variety of ads, they are compelled to take all measures to serve the desired volume demands of Google or Yahoo. They are in no position to earn more money for themself if this would reduce the money they send to Google/Yahoo.
This restriction makes no mention of the non-transparency of the market, as well as the non-competitive nature of the market when all vendors get their upstream from the same two providers, with the same cap on revenue payout. The combination of rate-fixing restrictions, exclusive and restrictive licensing of ad feeds along with other more legitimate forms of market power are serving to stymie the revenue growth for domain owners as well as domain monetization companies.
The industry is going to have to tackle this hurdle together. It will be difficult being that most domain monetization companies rely on Google and Yahoo for the majority of their revenue. Even the ones that have less restrictive contracts are very dependent on them as for ad feeds.
What is needed is a standard to make keyword and contextual advertisement auctions more extensible. Just like Open Social enables the aggregation of social media, and Open Ad Network would enable each domain owner to run their own AdSense-like system, and the decentralized network would allow advertisers to manage bids across many such systems.
If this system was implemented, there would no longer be the need for a middle-man.
This not only frees up more profit for the publisher, and possibly savings for the advertiser, but reduces other forms of friction in the market such as imperfect information.
Currently, domain monetization is driven by ad-matching. Ad-matching is governed by user-behavior data – something only the big network entitle themselves to. Once the publishers regain the rights to their own user behavior, then they will be in a position to optimize their own ad feeds going forward with the aid of 3rd party services. They will also be able to manage the viewing rights to this historical data to enable advertisers to validate the integrity of their data. Certainly, using 3rd party services to track performance would be necessary to serve both advertisers and publishers. The differnece is, when 3rd parties perform this, they will do so at a competitive rate. Currently, Google doesn’t allow publishers to bid different amounts for different areas of their network. Also, instead of getting real performance data, they get a derivative “quality score”. It is my assertion that these sources of friction, and these unwarranted restrictions and inefficiencies are causing the syndicated media revolution to be delayed.
It isn’t the technology that is holding us back at this point from accessing an open web media and advertising platform.
As if the exclusive clauses of the search behemouths weren’t enough, they always have their spare war chest to dip into to acquire any budding threat.
That’s why as an industry, we need to hit them with a problem they can’t buy their way out of. We need to develop an innovation with a poison pill – one which is not protectable via intellectual property laws. (standards made to drive open marketplaces) So, the attack CANNOT come in the form of a product or service. This is too narrow and is prone to acquisition. In a lot of ways, its probably too narrow to see the solution as one website. It’s a lot more realistic to assume that the next-generation web will be driven by services that power many sites, rather than “sites as businesses”.
Let me give one concrete example that will provide some context. Everyone knows that Craigslist owns the market on classified ads, which is all but cornered by other major players.
If the Web 2.0 revolution is worth its salt, why hasn’t the Craigslist site-based model been replaced with a service-based model, where a multitude of sites can be populated with shared data?
What is the use of hot air, hype and buzzwords, if they can’t motivate people to see what the real opportunity is?
Craigslist has the right price, but, if you can’t mash up their data with your own interface, or your own filtering mechanisms…..it is limiting its own potential.
Just like craigslist came along with a mostly free service, which reduced the demand for print classifieds, a novel service needs to come along and allow even more liberal access to the underlying data.
I don’t believe that any SINGLE domain will be good enough to take craigslist head on.
No single domain with this much of a lagging start could muster anything near the existing market craigs brings to its audience.
Thats why a mutli-domain strategy is needed. It won’t be a ‘site’ that topples craigslist, but a web service which syndicates its media on many sites.
To summarize, developments in web video and social media have created tremendous opportunitiews for web publshers. It is in the domainer’s best interest to support open standards that would facilitate open markets for both advertisements as well as syndicated content.
This may be challenging for an industry that is not accustomed to assembling consortia to develop new web standards.
The road ahead awaits.
Source: Matt Robson writing for DomainNews.com – February 1st, 2008
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