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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

This fact may explain why Facebook has “opened” up so much (with the goal of becoming a social networking fixture on other sites). A smart move in my mind, as stand alone “meta social networking” has seemingly begun to “jump the shark”. It also may explain Googles recent legitimate salvo in this battle.

In my opinion, David Bohnett, the founder of GeoCities, said it best in the recent article in the Journal :

“It’s the same as it is today — people want to feel like they’re connected, give them a set of tools and they’ll do it.”

Anywhere you go on the web, you should see social networking capabilities. People want to create community anywhere they spend time. They use this community function as a place to make a spectacle of their lives, interests, and expertise…to provide legitimacy to their desire to belong to the community.

Rather than making predictions now about the demise of facebook and myspace, I’d rather discuss the future…

The real long-term question in this game is: Will any company get it right for the end user? There is no reason (other than a walled garden’s need for revenue and unique users!) that an end user should maintain several different online profiles and manage the content in each across the many communities in which they they socialize. I like the idea of the single login for all Google apps. It makes my life easier, and it makes the ads Google serves up more relevant and ultimately more profitable.

Nirvana for end users would be to have a traveling profile that they can access across several niche sites. Why shouldn’t my movie preferences be used in helping me determine what books I’d like and vice versa?

Sadly, I don’t think this nirvana is a reality in today’s landscape, as the large social networks like myspace and facebook rely on logins to target and these businesses will certainly not welcome the idea of an open ID for social networking features that span all sites. It is my hope that when most tier 1, 2, and 3 sites have social networking features, the ability to open these profiles to other networks will exist. If looked at intelligently, its a win-win. The end user gets a profile that travels, lessening his or her burden, and those sites that accept this traveling profile benefit by more relevant recommendations for ads and content (higher eCPM). The good news is, I don’t think that technology is too far away…it looks to be right around the corner. For some interesting reading about these kinds of solutions, read Alex Iskold’s Piece on the Attention economy and read about Attention Profiling Mark-up Language (APML).

So what do you think? Will it ever happen?

This post originally appeared at: http://www.relevantlyspeaking.com/rs/2007/10/1/social-networking-is-a-feature.html

“I’m curious though, is there anything you feel like you will miss, or miss out on as a result of punting? Was there anything specific you found of value versus everything else available to you via the Internet that you feel “I will miss that, but it just wasn’t worth the trouble.”

Jason’s answer was that the only thing he will miss is his ability to promote what he is doing.

2. Profy.com reports that:

“the UK-based Telegraph has reported that “more than two thirds of employers are banning or restricting the use of Facebook and similar sites over fears that staff are wasting time on them when they should be working.”

3. Even the advertisers are chiming in: From a recent report titled: Advertisers disappointed with Facebook’s CTR,

the author asks:

“More reports are circulating of disappointing click-through rates for advertising placed on Facebook. Should marketers persevere or concede that social networking sites aren’t yet the place for ads?”

In the article they cite GigaOm’s evaluation of the issue:

“Word on the street, Madison Avenue that is, is that advertisers who have experimented and bought ads on Facebook are universally disappointed with the results. Consequently, getting these big brands to come back to the table and pony up again with significant ad-buys is going to be very difficult. In other words, Facebook is looking at a foggy fiscal future, and needs to make some tough decisions.”

So whats all the noise really about? It seems that larger social networks have proverbially “Jumped the Shark” and face the same problems any other high-traffic site face: How do you make it easier for users to find what they want (and prolong engagement) while making it easier and more profitable for advertisers to monetize the attention of these users?

The value for users of a social network is the network’s ability to connect people to people and people to content. The value of of these networks to advertisers is the ability to connect these users to RELEVANT messages and offers that users will respond to.
The principal issue for both users and advertisers is time. Users have less of it the more involved they become with the web and social media, and advertisers demand immediate results. In order for these “Meta” social networks to remain relevant in a world where niche networks are popping up daily, they need to proactively deliver relevant content and ads, rather than putting the onus on the user to find whats relevant.

The good news is there is plenty of technology on the market or coming to the market that powers this type of “semantic” delivery. Stay tuned here for more on this subject in the next couple of months!

This post originally appeared here: http://www.relevantlyspeaking.com/rs/2007/8/3/social-network-backlash-continues.html

On a spree of acquisitions including LastFM and WallStrip, it looks like CBS is seriously in the game. I cant help but think Quincy Smith is hitting his stride inside CBS. His experience in the world of Silicon Valley VC and New Media financing with Allen and Co, has him well prepped to bring CBS along in this new and dynamic media landscape.

It seems that the recent acquisitions show that CBS understands that the new social components to distribution that deliver context to media are just as important as the content itself. Many have opined lately that the “new” web represents two styles of “operating systems”. The first is the search engines such as Google, that deliver a gateway into the rest of the web and apply contextual (machine mediated via algorithms) relevance to the myriad of media and information available from a browser. The second “operating system” is represented by the social networking sites that provide social relevance by suggesting similarities between two people and their likes and dislikes. LastFM clearly falls into the second category and will provide CBS with the technology and social infrastructure to deliver their media assets into more willing and responsive eyes.

This move is both intelligent and exciting for those of us following evolution of online media, as it represents another major player (besides Fox) buying into the “social networking ” operating system as a way to allow their content to be distributed relatively unhindered by the ‘command and control’ policies that most media companies still practice today.

We knew this was coming. Old Media is scared Sh&%less of new media. They are losing control of their content. The Old Media model is set up with several layers of hands that need feeding each time a piece of content is consumed. This is likely the result of the world of media being dominated by lawyers who like to lawyer. Clearly, the Old Media companies incur a large liability risk if too much of this content is viewed without compensation (not to mention the lost revenue from this free content cannibalizing the paid licensed content).

However, the market will eventually change the Old Media model… survival will dictate that. User generated content will continue to compete with professional, expensive, Hollywood style content and Hollywood style content will lose because free always wins.

Google, the great contextual engine of our time, now has more power than Hollywood because Google makes things relevant on a 1 to 1 basis. Hollywood, on the other hand, tries to please all people (large markets) including themselves with 4-hour-long self-absorbed, expensively produced, painfully boring shows like the Oscars. They fail every time because that model does not work within this our new niche market economy. The end user is in control…we are now our own arbiters of good taste and we will find what we want in the format we want to consume. Google helps us do that. So to will Yahoo’s and Microsoft’s search engines.

This is where it gets really fun. The technologists actually get their revenge for being stuck in the back office for years while the lawyers and creatives made all the dough. Now the guys that make all of these tidbits of content relevant via algorithms and behavioral science are the ones that have the power and the world is looking at them to make sense of the new reality of a world of limitless media. If you get a chance, read Spencer Wang’s research about the shifting earth in the media and entertainment industry. He makes a few great points that the old media guys should heed. In the end, Mr Wang concludes that the firms that provide relevance (context) stand to gain much in terms of market power as user generated content continues to fill the databases of the web. I think NewsCorp sort of understands this, as do parts of CBS (think Quincy “Q” Smith).

With this lawsuit, I think we see the evidence of the fear that Old Media has in realizing that their content is becoming less relevant as more content supply becomes easily accessible to the market. I think Old Media is trying to scare the daylights out of anyone (Google is the student they have singled out to make an example) trying to provide useful context (more useful and consumable distribution) to the glut of media available online. The problem here is that Old Media is used to controlling the distribution of their content. Its clear that with the web, they no longer do. I hope that eventually Old Media learns to embrace the new distribution model so us poor consumers (who control demand) have the benefit of choice.

Wow. These guys have nailed it. Goto: http://jpgmag.com/ and check out thier site and some of the back issues. The cliffs notes on the company are summed up best by Scott Karp of Publishing 2.0:

The idea is elegantly 2.0: give the new breed of digital-technology-enabled pro-am photographers a place to showcase their work and then have the same community of photographers vote on the best photos by theme. So far, so 2.0, but nothing innovative. Here’s the radical step: take the photos chosen by the community and publish them in a print publication. Why? Because a digital rendering of an image on a computer screen is no substitute for a physical, glossy rendering of the image. Granted, that is a subjective, aesthetic judgment, but the publishers of JPG, the newly created 8020 Publishing, are betting that a lot of people think this way — a radical bet to be making in this “go digital or die” media environment. But rather than assuming all offline media will die, 8020 Publishing is trying to figure out what content will work long-term in offline media, and then marry that with the best of digital media and web-enabled community.

And unlike other user-generated content sites filled with silly, purile stuff, JPG is attracting, well…art (gasp! a value judgment!).

Whats so exciting here is that here, for what I think is the first time, a publication is letting the wisdom of the crowds determine what the most compelling imagery for the issue. Think about it, these guys let the readers decide what is topical, artistic and exciting. How Novel! The LongTail meets art and puts the critics and enthusiasts in control.

I am looking forward to more form 8020 Publishing!

“Digital life has really screwed with the notion of public, removing traditional situationism (Goffman) that connects strangers. If the Kenyan farmer is connected to the Internet and reads English, he can be a part of Bloomberg’s public via the New York Times. Yet, this does not mean that the New York Times would conceptualize him in their public, nor does it mean that his public acts would be equally visible by other constituents of the Times.

Digital architectures alter the structure of social life and information flow. Persistence, searchability, the collapse of distance and time, copyability… These are not factors that most everyday people consider when living unmediated lives. Yet, they are increasingly becoming normative in society. Throughout the 20th century, mass media forced journalists and “public” figures to come to terms with this, but digital structures force everyone to do so. People’s notion of public radically changes when they have to account for the Kenyan farmer, their lurking boss, and the person who will access their speech months from now. People’s idea of a public is traditionally bounded by space, time and audience – the park is a public that people understand. And, yet, this is all being disrupted.

In talking about “super publics,” I want to get at the altered state of publics – what publics look like when they are infused with the features of digital architectures. What does it mean to speak across time and space to an unknown audience? What happens when you cannot predict who will witness your act because they are not visible now, even though they may be tomorrow? How do people learn to deal with a public larger and more diverse than the one they learned to make sense of as teenagers? How are teenagers affected by growing up in an environment where they can assume super publics? I want to talk about what it means to speak for all time and space, to audiences you cannot conceptualize.

A reporter recently asked me why kids today have no shame. I told her it was her fault. Media is obsessed with revealing the backstage of people in the public eye – celebrities, politicians, etc. More recently, they’ve created a public eye to put people into – Survivor, Real World, etc. Open digital expression systems coupled with global networks took it one step farther by saying that anyone could operate as media and expose anyone else. What’s juicy is what people want to hide and thus, the media (all media) goes after this like hawks. Add the post-9/11 attitude that if you hide something, you are clearly a terrorist. Should it surprise anyone that teenagers have responded by exposing everything with pride? What better way to react to a super public where everyone is working as paparazzi? There’s nothing juicy about exposing what’s already exposed. Do it yourself and you have nothing to worry about. These are the kinds of things that are emerging as people face life in super publics.

I want to demarcate super publics as distinct from publics because i think that they need some theorizing. In other words, i think that we need to understand the dynamics of super publics, the architectures that enable them, and the behaviors and cultures that emerge because of them.”
Full entry is here: http://www.zephoria.org/thoughts/archives/2006/03/22/super_publics.html#trackbacks 

Danah has written on the subject of social networks prior in her piece on Myspace/Friendster. It can be viewed here: http://www.zephoria.org/thoughts/archives/2006/03/21/friendster_lost.html#trackbacks
Her bio can be found here: http://www.danah.org/ 

Heres what she says about herself:

“My name is danah boyd and i am a PhD student at the School of Information (SIMS) at the University of California, Berkeley. My research focuses on how people negotiate a presentation of self to unknown audiences in mediated contexts. In particular, my dissertation is looking at how youth develop a sense of individual and cultural identity in “public” online environments like LiveJournal, Xanga and MySpace. Additionally, i am concerned with how digital publics do not look like the physical publics that we traditionally consider.”