Given that ~30% of users access the internet from work, it looks like we still havent seen the sweeping productivity lift that pundits promised back in the gogo years, but we are on track. Go web, go!

Below is some interesting data about this work online activity:

Here’s why:

The impression pricing model (CPMs) depends on scarcity (of channels, pages, broadcast spectrum). The internet destroys the CPM model assumptions as new content comes online each day, thus destroying scarcity in the CPM model. Inventory on the web is infinite, so non-premium inventory will price lower. While more content (ad inventory) comes online, attention remains FINITE. Any single blogger now competes with the likes of the NYT or WSJ. Performance pricing and direct response will in the end rule the web media buy.

Also, while this is occurring, publishers are self cannibalizing pricing by using ad networks that reduce their inventory to fungible goods.

The outlook seems bleak for the firms that depend on impression based pricing. Digg is a great example of how massive amounts of new inventory can hit the market quickly. Digg instantly competes with their dugg destination posts. Look for more moves like yesterday’s Yahoo’s APT accommodation of performance pricing and look for the other quality performance networks to realize more revenue.

“If you have the model and the means to get through an economic contraction with growth, don’t sell now…  keep your head down, execute and grow. On the other side of the contraction, your business will be worth MUCH more”

Also, Jason Calacanis, a serial successful entrepreneur opined recently (paraphrased) on TWIT that the best time to make a move in this market is during a contraction because you have less competition. If you are executing, you’ll grab more market share, you will be a more valuable property, and attract better talent. Jason speaks from experience…he has started businesses in downturns.

The trends look good for online media: there is a flight to more measurable and agile online media because online media consumption time is increasing its share of the (finite) user media consumption pie. Also, the dollars that leave radio, TV and Print will move into the online space to gain on the 20% user consumption time of online media.

Smart marketers are slowly levering up the ~7% of thier budgets in online media to get closer to matching the 20% number. They also know that the trackabilty and ROI equation works in their favor, as they can deliver faster, more direct and meaningful results with online media (especially as performance-based pricing becomes more popular).

In the end the “wheat will be seperated from the chafe”, but the firms with focus and resources to capitalize on the opportunity a contraction presents will come through a downturn stronger and more resilient.

[youtube=http://www.youtube.com/watch?v=FZ1st1Vw2kY]

[youtube=http://www.youtube.com/watch?v=MpIOClX1jPE&hl=en]

Today there are many reasons a user might want to remove or move data: use in another app, privacy and security, fatigue with a “platform” that no longer provides utility, etc. But in the not-so-distant future there will be even more reasons to move data.

A model or application will come along that shows users the real value in this data about them and how they spend their attention. It may be the next logical evolution of advertising (think Discover Card Ads: “the advertising that pays you back”), or some other such incarnation. As sure as innovation and capitalism live and breath, its coming…and users WILL get their data.

Most of the TOSs of the prominent web gateways (search engines, social networks and productivity tools) state that they own the data and Scoble’s “scraping” of the data isn’t lawful.

So today the conversation looks like this:

USER: I am spending my attention on your site. My attention creates data stored in your environment. I should be able to move the data I have created to another site so I don’t have to replicate the time I took to create it in a new environment. My data should follow me around.

SITE OWNER: Yeah right! you agreed to the TOS. We provide this service for free. The data belongs to us and we use it to make money so we can provide you with the service without charging you for it.

In the future, it will be more like this:

USER: Hand it over.

SITE OWNER: What format? XML? APML? OPML? RSS?

Data Portability.org is seeking an open standard for APIs to talk to one another so a user’s data can be moved from one site to another with out a lot of fuss. Many web 2 apps and even Microsoft have joined. From this move to join DataPortability, its clear that the issue of portability is technically nearly solved, and that there is a financial reason to be a part of the solution — many of the firms that have joined are those who would benefit greatly to giving their users the ability to grab data from other sites and port it to their own properties to create a stickier site where users will spend more of their attention.

Many of these joining firms also recognize that in order to have the honor of being a “holder” of someone’s data they will need to offer the option to collect that data and use it elsewhere. If users cant move their data, they will take their attention somewhere else.

While many will never actually port their data elsewhere, they will certainly want to know that its theirs to do so, should they desire. Its critical to the element of trusting the vendor you spend attention with. To quote Fred Wilson of Union Square Ventures:

Why does this matter? Because trust is going to become a bigger issue going forward. I realize that many people trust Google and others to safeguard their data. But the best way to garner trust is to tell people that they “own their data” and they have the right to put it anywhere they want. The simply act of doing that will garner even more trust.

Control will ultimately be with the user (they can and will join hands and fight to be able to move their data—there are more of them and no shortage of lawyers in this country). People will want to pull data out of Facebook when they graduate and have a job (and less attention to waste on Facebook) and put it to use in a more productive environment that enhances their career, bank statements, social life, etc.

Users will find a way.

Oh, and Open always wins.

This post originally appeared here  ]]> http://life2beta.com/2008/01/25/the-war-over-data-and-other-short-stories/feed/ 1 http://life2beta.com/2007/12/31/2008-predictions/ http://life2beta.com/2007/12/31/2008-predictions/#comments Mon, 31 Dec 2007 04:51:24 +0000 tripfoster http://life2beta.wordpress.com/?p=87

This post originally appeared here.

I have recently been thinking about the efficacy of the online ad industry’s ability to generate demand.

Its an interesting problem…and one in my opinion, the industry hasn’t solved yet.

The efficacy of search is a result of its ability to satisfy a prior demand. Its elegant. You want to learn something. You search for more information. You get your results and links to relevant products are presented next to the information. Its no surprise then that 40% of the of the $21.4 billion US online ad market is paid search.

So the problem then isn’t the fulfillment of demand — it’s an efficient process for those of us that use the web regularly.

According to Chamath Palihapitiya, the VP, Product Marketing and Operations at facebook: “For every dollar spent on demand fulfillment, there are hundreds spent on demand generation.”

He rightly believes that there is a huge opportunity in the demand generation space. Today, Google is a demand fulfillment company worth $217 billion, similarly, Yahoo! is a $33 billion company. If his math is right, then the dollar opportunity for demand fulfillment is represented by $25 trillion.

Today, facebook is groping with this opportunity. While Beacon has had a very rough start and may perhaps end up pushing away many users (teens are notoriously wary of marketers), Beacon was an attempt to use the associations among its users to present brands and products in what they thought was a non-intrusive way. The theory was that if friends saw friends buying Budweiser, they might consider buying Budweiser themselves.

The assumption is that if your friends do it, you are more likely to do it. Unfortunately this assumption also flouts the another key teen ideal: independent thinking. The humorous image below from bokardo.com depicts how these Beacon ads seem to have been received:

While the Beacon experiment’s final results won’t be seen for some time, facebook should be applauded for trying to innovate and capture a part of the demand generation opportunity. Given the bright minds over there, I am sure the experiment will evolve into something that monetizes the attention of its users and works for all parties.

Yet the big question remains: How will the industry create a win-win solution to demand generation? Obviously, the relevance and timing of the marketer’s messages are critical. However, delivering relevance or timing without the other will come across as intrusive, or even worse: spying. Beacon is an attempt at providing relevance, but its difficult for something like a can of beer to be timely unless those promotions about that product run at 5 PM on Thursday, Friday and Saturday night. If they can get that right, and the ad message comes across as additive to the experience, then they are on the right path.

The problem with demand generation and most of today’s solutions, is that if you don’t get relevance right, its just wrong. Wrong = intrusive, and intrusive = an ignored message or even worse, a negative impression.

The Holy Grail of demand generation hasn’t changed: Right message at the right time to the right user. But I think the solution is more complex than simply showing friends what friends are doing. There needs to be some intelligence to the recommendation of the ad message and that intelligence has to take into account timing and context. Recommendations also have to consider recent behavior of the recommending party and the recommended party. Another problem is that most facebook users present themselves in a way that protrays thier own self image versus who they really are and what they really do. This reality prevents an ad server’s decision from being accurate.
Many smart people are working on ths problem today, becasue of this, I look forward to the day when ads are complementaty to the online experience and deliver a message that is both relevant and encourages me to start thinking about (latent demand) products or services that I normally would not.

So how far away is this Holy Grail???

This post originally appeared on Relevantly Speaking.

All of the recent hype around “meta social networks” like Facebook and Myspace and their experimentation with new and bold forms of advertising belies the fact that advertisers and users are still on an elusive quest for relevance between themselves and what’s available on the web (other users, content, and ads). The quest has lead these parties to discovering social networks as a way to, well…discover.

The act of discovery is a simple exercise in finding other items (content, people, ads, etc) that are relevant to you and your interests. This desire to find new and interesting things on the web has drawn people into social networking, yet Facebook and Myspace are falling short because they are mere aggregators of massive amounts of people. The current movement from these larger Social networking “Portals” to niche networks with deeper and more relevant content (reminiscent of the late 90’s user migration from meta portals like yahoo and MSN to smaller, niche player sites) simply means that people are discovering more relevance on the smaller more focused sites. Facebook and Myspace are too busy acquiring users without focusing on the use of those users….and people are leaving. Just look at the success of Ning. The current valley quip says that as soon as your network gets big enough, you goto Ning.

Focus is the reason that the online user is finding that the smaller sites are better source of content. Any site worth its beans will have social networking tools in the future and their focus alone will make them more relevant to their users. Not rocket science.

For an example, look at bookQube. Its a new “social network” for those interested in books. Books, like TV and other media, provide the ultimate water cooler conversation and consequently a great place to aggregate like-minded individuals around common subject matter (relevance, anyone?).

Not only does bookQube provide the blogging, commenting, networking and book club creation tools, it also allows its users to visually locate other users, content, and books they might like based on their interests they have already expressed.

This process of intuitive discovery is the future of social networking. Discovery as it is today will be turned on its ear by semantic web functionality like recommendation engines and real-time data analysis that can tell users (and advertisers) what media and users they will like and “auto-magically” recommend them to the user — vastly speeding the process of discovery (and improving a site’s navigation and engagement.)

This is where the web, or web 3.0 (excuse the hackneyed dotcom nomenclature) gets fun. A well designed site will have enough information about the user and the content on the site to dynamically tell them what on the site is most interesting to them and point them in that direction. The user wins with relevant content and friends and advertisers and publishers win with more relevant ads that people actually click on because they are not the usual interruptive tripe.

This post originally appeared on the Relevantly Speaking Blog: http://www.relevantlyspeaking.com/rs/2007/11/27/the-real-use-of-social-media.html