Online Advertising in an IP-Enabled World

With word out about Yahoo’s acquisition of Right Media I want to publish a post that’s been sitting in my drafts folder for a good couple of weeks. Think about where online advertising is going and how the internet is expanding and what that means and why an open ad exchange makes the best sense for getting the right message to the right person at the right time.

First the internet. In the past we had IPSs (AOL, Earthlink, Comcast) and portals (Yahoo, MSN) serving as the on-ramp to the internet. The concept was that you would “log-on” to the internet and have the portal act as your guide. Microsoft had a marketing slogan that asked, “Where do you want to go today?” as if the internet was another world which required a guide.

In the past few years search engines, notably Google, have taken over the role of guide and have become the most popular starting point, serving as an index for the internet. People became more savvy and a few well-placed keywords are all you need to drill deep into a site, by-passing front doors, jumping directly to the page with the information you seek. With always-on broadband and multiple computers in each home, search engines have became touchpoints that people would turn to many times each day to vector out and ferret out a specific piece of information.

Cell phones are the next frontier and there’s already pressure on the cellphone carriers to breakdown their walled garden directories and search engines are re-engineering their sites to adopt themselves to the mobile context.

On the bleeding edge we’re seeing the internet experience fade away as a separate experience as more and more objects around us are connected to “the cloud” and are “internet-enabled.” Much has been written about Second Life and other alternate reality environments that are infiltrating our everyday experience of the world around us. But the cloud is seeping into our First World life and data and experience on the internet is more and more inter-mingled into the real world.

  • The SanDisk music player is wifi-enabled and will pull the latest music down based on your listening profile for your drive to work.
  • The Nokia N800 wifi-tablet has media player software so you can stream your music collection anywhere. It’ll run Skype so you can save on your cellphone minutes and with GPS software, it’ll keep track of where you go or give you directions.
  • Smart Signs Media has technology which enables a billboard to pick up the FM radio signal of passing cars and flash messages customized to the demographic of the radio station to which you’re listening.

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I even joked to colleagues about a scenario where internet-enabled signs on the bathroom wall would replace the sports pages tacked up in front of the men’s room urinals at your local sports bar. The content on the page would be swapped out based on behavioral cookies left on your cellphone browser which it would pick up via Bluetooth. At a recent Stirr Mixer, a version of this was starring me in the face!

To me this says that there is no longer an separate experience called the internet. It is becoming an integral part of the world around us. On the one hand we struggle to apply relevance to Web 2.0 and what that means for the average Joe but on the other hand, we see bits and pieces of this new web popping up all around us everyday infecting everyday objects with connected intelligence.

How will advertising work in this new world of IP-enabled objects? The current landscape of online advertising consists of a myriad of networks and business models that are experimenting with different ways of getting your attention. We have text ads, banner ads, flash animations, affiliate networks, CPM, CPC, CPA, Branded MySpace profiles, microsites, in-game advertising, the list goes on. Each method talks to its own collection of partner sites where content is blended with messages to varied degrees of context and integration. If you were to compare this landscape to financial markets, it would look like disparate stock exchanges without a currency market to normalize and determine value.

Right Media is unique because it normalizes monetization across multiple ad networks. A single line of javascript on your site can now optimize across multiple ad networks in realtime so that the best offer is served up, dynamically, to your audience.

To me, an open and transparent ad exchange is to the online advertising market as the global currency markets are to the global economy. By allowing markets to compete with each other on an open exchange, advertisers and publishers can optimize their sites against the maximum opportunity and let their audiences determine which messages resonate the best and adjust accordingly. An exchange is best able to integrate new publishing platforms (including toilet billboards!), new advertising units, and optimization mechanisms.

An open market trumps a closed exchange everytime so I give a big ol’ high-five welcome to the folks at Right Media. If you run ads on your site, check out Direct Media Exchange for a glimpse of the future. They’ve integrated delicious, youtube, and flickr as learning tools and have a vibrant community around their product. They even held a recent hack day which shows that their heart is in the right place for innovation. Congratulations and welcome to Yahoo!

UPDATE : Charline Li at Forrester has a great post on the Right Media ad exchange model and the benefits for Advertisers and Publishers.

All Things Digital launches

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Walt Mossberg & Kara Swisher have joined up with my favorite headline writer, John Paczkowski from Good Morning Silicon Valley on a new site run by Dow Jones. All Things Digital is a place where Walt and Kara can stretch out a bit and write in a way that the column inches in The Wall Street Journal would constrain.

All of Mossberg’s reviews from the past two years are now out from behind the subscription wall in an experiment to see if they monetize better out in the open but they’re going to need to tune the Ad Sense placement a bit better because I don’t think people are going to be interested in the “Mossberg on eBay” links they point to right now. House ads for other Dow Jones properties are running tonight but I’m sure you’ll see others ads rotate in as things get rolling.

Each writer has a lengthy ethics statement which is as much a primer on their individual style as it is a full frontal of any potential conflicts of interest.

I don’t own a single share of stock in any of the companies whose products I cover, or any shares in technology-oriented mutual funds. Because of this, I completely missed the giant run-up in tech stocks a few years back, and looked like an idiot. However, when the tech stocks crashed, I looked like a genius. Neither was true.

– Walt Mossberg

So, if Yahoo makes a smarter move than Google, or if I agree with Microsoft’s position on some issue, rather than Google’s, you’ll read it here whether Megan (her spouse) agrees with it or not. If Ask.com buys a small, smart company that Google was also pursuing or declined to buy, I will report it and praise such a deal, even if Megan was involved on the Google side. This may result in some arguments at home, but it won’t affect the coverage here.

– Kara Swisher

I should disclose right at the start that seven years ago, at my request, a former employee of Digiscents procured for me an “iSmell” t-shirt which I wore to the gym for a number of years.

– John Paczkowski

As far as I can tell, the whole thing is running on WordPress. Great job folks! Subscribed!

Hairball

cat.pngSome memes you just can’t seem to escape. They follow you around and track you down, mocking you from the corner of your desktop, infiltrating your search results and clogging up your feed reader.

First Anil’s seminal post on Cat Grammar which popped up not only in my feedreader but then again on Techmeme and in various online conversations through the day. Next we have a quick history of blogging from Valleywag in which we find cats as the basic motivation driving each new publishing platform. Finally today, while looking for something totally unrelated to. . . cats, I see that the most popular slideshow on SlideShare is about. . . cats.

What will Web 2.0 do for my neighbor Ron?

remotecontrol.jpgOne of the coolest things I brought back from the recent Web 2.0 Expo was this t-shirt that said “Web 2.0 is – – – ” with a big blank box for you to write in the definition of your choice. People at the show got into the spirit of the occasion and used Sharpies to fill in their own definitions. I spotted Ross Mayfield on stage wearing his t-shirt with the “made of people” scrawled in bright red.

I chose to leave my t-shirt blank so I could ask people around town what they thought as I ran errands around town. The responses have been enlightening. To be blunt, no one really gives a damn.

I think about all the whiz-bang tools that are being released on a weekly basis, the latest additions to the scene jumping up and down for our attention. How are these sites going to improve the lifestyle of my neighbor and his beloved rose garden? Sure, he’s got always-on broadband (his wifi Linksys router blinks at me each evening) though he doesn’t really need it. Broadband just happens to be the best deal in town and it allows him to be online while his wife is on the phone. Yeah, it’s nice to be able to comment on the latest blog postings about his favorite ball team but he would rather debate stats face to face with his mates at work, it’s a richer experience. He likes to keep in touch with his kids via email but has no need to IM them or (god forbid) get their latest Twitter updates. The acceleration of the news cycle has done little to improve his quality of life.

The popular media has attempted to bring meaning to this flurry of activity but they can only do so through an old familiar lens which paints the Web 2.0 revolution in terms of teenage millionaires and insider techno-babble. Most people dismiss Web 2.0 as another self-important bubble of exclusive back-slapping.

The bigger challenge we need to tackle is how to transform all the great work being done today as something that has an impact on the broader world. The stage is set – all the foundations are in place – everyone who is interested in web-enabled this or community-powered that are already wired up and connected to each other. The trick is bringing all this connectedness to bear on greater issues in the world around us.

I think it was Kevin Lynch of Adobe who said at one of the “high order bits” at Web 2.0 Expo that the first phase of computing was driven by the need to make individuals more productive and produced applications such as Word & Excel. In the Web 2.0 phase we’re now making groups more productive in their collaboration via community-driven applications such as wikis, social news sites, and socially driven television shows such as American Idol which is basically a crowd-sourced hit machine. The more difficult but ultimately more rewarding challenge will be bringing the benefits of participation to the masses in a way that is intuitive and baked into the way the rest of the world lives their daily life.

History is instructive here. The introduction of a free press must have felt just as liberating back then as it does today to anyone who has interacted with a blog or social networking site. The power to reach and influence a broader audience is a thrill. When, for better or worse, the press evolved into the fourth estate, the rules around participation were codified and now most people do not enjoy ready access to the media. Today we all benefit from the (relatively) open exchange of ideas that the free press has given us. When Ron gets his daily paper delivered to him, he gets a snapshot of the best of what this ages old platform has to deliver.

The next great opportunity is to package up and deliver to the Rons of the world the best of what Web 2.0 community has to offer in a format that is as integrated and easy to consume as his daily Chronicle. We’re seeing bits and pieces of this poke through the topsoil. I’m looking for a radio station that features the best podcasts of the day, a terrestrial TV station that streams the most popular clips on YouTube, a version of Upcoming embedded on my refrigerator door.

Everyone that attended the Web 2.0 Expo is a member of the creator class – we enjoy the ability to interact and control the world around us. But most people would rather come together around someone they trust to deliver the world to them. They’ll vote with their attention and get strength and conviction from their chosen community. No matter how cool and shiny we paint this our ever-customizable Web 2.0 nirvana, we cannot ask them to change their habits and join us in our medum – we need to meet them using tools they understand.

Where’s the Web 2.0 universal remote?

UPDATE : Daniela Barbosa points to a flickr thread where people are posting photos of their Web 2.0 t-shirts. Add yours to the cloud!

Wagner James Au on why old school marketing doesn’t work in Second Life

James has been covering Second Life since the beginning. If you ever have a chance to have him walk you through the virtual world an point out its hot spots, do not pass it up.

Today he writes in GigaOM about a recent research report which found a large majority of residents are disappointed with real world marketing company’s approach to marketing in Second Life. This comes against a backdrop of large companies beginning to question their commitment to marketing themselves via this channel when the prospect of any ROI is so remote.

To play in Second Life, corporations must first come to a humbling realization: in the context of the fantastic, their brands as they exist in the real world are boring, banal, and unimaginative.

Car companies are trying to compete with college kids who turn a virtual automotive showroom into a 24/7 hiphop dance party, and create lovingly designed muscle cars that fly, and auction off for $2000 in real dollars at charity auctions. (click thru to read this complete with links)

Yes, I think the car companies need to rethink this entirely – the product design people should be in here, not the marketing department.

BluBet, predictive markets for the rest of us

blubet.gifOne of the problems with predictive market sites is the complexity of the economic model makes it difficult for the casual participant to get involved. Because the underlying dynamics of the market or methods of measurement are hard to grok, the markets never really scale to a number that filters out noise effectively enough to get a strong signal.

In order to gain mass adoption, you need to make the game drop dead easy. Digg has done a great job at this. Right from the results screen it’s immediately understood what’s going on and the wonderful little flash widgets give you immediate gratification when you add your “digg” to a story and it’s easy to see how you can make an impact. Flickr is the same with it’s “favoriting” feature. A simple click on the “Add to favs” star and you see the impact and know you’re feeding the interestingness machine.

BluBet is new service along the same lines. A wager is the simplest way to express your conviction and it’s a little more compelling than a digg-like vote because you’re putting your reputation on the line with your BluBucks so it’ll keep you coming back to see how you’re doing. I’m with Dave McClure, “this is going to be big.”

I’ve got a wager going right now. Do you think any of the top 100 newspapers in the US will cease to be available on newsstands by the end of 2007?

Zillow Heat Maps

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I was just checking out Zillow’s new redesign and noticed something I hadn’t seen before. The Zillow Heat Map layer shows you relative price per square foot over a region. Check the box in the upper-right of the map view and zoon out to city level to see it in action.

Was that there before or is this new?

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Amazon Recommendations Gone Haywire?

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I love how Amazon remembers books that I’ve purchased from them a long time ago and offers up recommendations from time to time of other books that I might be interested in also reading. Usually they’re pretty relevant (except for when I purchased a large print book on Frank Sinatra’s life and then got on the “other seniors with bad vision also enjoyed this other book in large print on Las Vegas legends).

This recommendation I got today though has me scratching my head. Does anyone else have an idea between the famous author who documented a mission to Everest gone wrong would have to do with a handbook on cancer?

Justin.tv knock off caps to be released by V-Tech

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It was only a matter of time. The latest internet sensation, Justin.tv has been picked up will become commercially available this Spring. Guangzhou-based electronics firm V-Tech picked up to the trend and is planning on making “Justin Caps” available for sale for $29.99.To keep costs down, the camera has been replaced with a high-resolution CCD cam and a condenser microphone. Connectivity in the United States is going to be via an arrangement with Virgin Mobile who will provide caps with a pre-paid plan for 1000 minutes with a code that will allow cap owners to login to the Virgin Mobile website and purchase additional minutes as needed or upgrade to the Infinity plan subsidized by video advertising inserted into the live feed every ten minutes.

Obvious Corp. is also in talks with V-Tech and Virgin Mobile and will connect their popular Twitter service to each Justin cap in a multi-media version of Twitter code-named “Snow” in homage to the 1992 science fiction book by Neal Stephenson. As a member of Snow, members will be able to clap their hands to activate a clapper-based shutter that will capture 10 seconds of video and sound and broadcast it to all their Snow network friends simultaneously. When asked why the beloved technology advertised on late-night television was used as the interface, the Twitter staff replied, “if someone’s clapping, it’s got to be worth broadcasting out to your friends.”

Justin Kan, the Justin of Justin.TV could not be reached for comment. He was too busy running from a crowd of applauding teenagers.