Since my first Tweet in April 2007, I’ve been using the service in different ways. In that time, my career has changed; the people using it are now beyond the early-adopted tech crowd which dominated when I first started using it; and more significantly, Twitter has added new functionality that has changed the pattern of usage.
In other words, I’ve changed; the people around me have changed; and the service has changed. So with that in mind, I’m asking myself now how should I use Twitter now? It’s become a new communications paradigm, and so our personal evolution in using it is an interesting thing to consider for the future of communications.
What has Twitter become
Put simply, people and companies use it to connect with other people. Not only that, but its become a means to discover information and people. The discussions on it have allowed communities to emerge (and organise), trends to be noticed, and people to be identified. Its created the social melebrity – the term I give to the trend of “micro-celebrities” – and created a new avenue to the consultant (online self-promotion), researcher (uncovering trends and breaking information), and business development manager (discovery of opportunities), among others
What’s different about Twitter now
Twitter was implicitly designed to encourage a gaming of human psychology based on the number of followers you had. The more followers, the more perceived status an account had and by extension a person or company. This status created perceived influence and authority – which in some ways was true, but true or not is not the point: it was enough of a motivator to get people thinking constantly “how can I get more followers”, a brilliant state of mind from the perspective of a profit-making company benefiting from usage.
Several new features have since emerged, one of which is lists. Lists themselves have become another way Twitter, inc has been able to game its user-base as it implies a sense of status. But from a user point of view, its also become a great new way to track people stream’s, which at core is what Twitter is meant to be about.
Foe anyone that follows a lot of people, tracking every Tweet can be impossible. I now hover around the 500 mark of people that I ‘follow’, but the reality is, I don’t actually follow them in the true sense of the world: only in the off-chance I check-into Twitter to see what’s happening. ‘Following’ these days is not a reflection of my engagement with that person, but simply, my interest (once upon a time).
Thinking about value
With all the above in mind, let’s now answer the question of who should you follow. Should it be people you’re interested in following, like how it’s always been no? I say nope to that, and here’s why.
I get no benefit following someone who is not following me back, other than the initial notification someone gets that I’ve followed them (and which I know can be quite successful as a marketing tool). The value we get, is if they follow us back, is the fact we can directly message each other. And this has real value: I know people who are impossible to reach via email, myself included sometimes, because of email overload. But, if someone sends you a direct message via Twitter – it can come to you via email, IM and SMS. And the conciseness of the message makes the communication more direct and pointed (a benefit in itself). It’s an efficient way of reaching busy people.
On the other hand, there is a real cost following someone who doesn’t follow you back. If you have an account where you follow more people than follow you, you are considered a spam account in the eyes of other users. If you follow more than a certain amount of people – say a few hundred – then you are not considered (rightfully) engaged in that person. And let’s not forget the cost to your attention: you get more value out of the Twitter stream when you can consume more of it – meaning, the less accounts you follow, the more engaged you are.
So what’s my point? Unfollow people and start using lists. Don’t be gamed by the Twitter communications platform, and start thinking about what value it can provide to you in your life.
Today, the Wall Street Journal published an article by a fund manager who suggested the Internet is now dead in terms of high growth. While I can respect the argument from the financial point of view (although he’s still wrong), it also shows how widespread and unsuspecting even the educated are for the transformation the Internet is preparing us. Yes, ladies and gentlemen – we ain’t seen nothing yet.
But I won’t get into the trends right now that are banging around my head, making me willing to change careers, country and life to position myself for the future opportunities. Let’s instead start with his core thesis:
The days of infinite margins, 1,000% productivity gains, and growth of market throughout the universe are long over. Internet companies now should be treated, at best, like utility companies that get bought at about 10 times earnings and sold at 13 times earnings. Even then, I’m not sure I would give the Internet sector the same respect as the monopoly-protected utility sector.
I am glad that was said, because this is more of a world-wide problem we have, that has lead us into the Global Financial Crisis (GFC). The ridiculous false economy generated over decades of speculative growth – where fundamental asset values were supported by unreal cash – is something we need to stop. The best thing the GFC has taught us, is that valuations need to be supported by independent cash flows with markets not manipulated to inflate their true value. And I can’t wait to see the technology sector (who along with their partners in crime in banking and property) use some basic accounting skills, and come to the rude awakening that, in the real world, that’s how things roll.
Where he is wrong however, is in the innovation that is creating new ways of generating revenue. More importantly, what we are seeing is a stabilisation in technologies invented half a century ago. The Internet and hypertext (the web is an implementation of a hyptertext system) have all been in development for 50 years – and it’s only *now* that we are coming to grips with the change. So to say this is a fad that’s now over, is really ignoring the longer term trends occurring.
As identified in the article, the biotech market will be massive, but I was told by the head of the PwC Technology park Bo Parker in March 2009 that it’s only just resembling Information Technology in the 1970s. However, when in comes to information, things are ramping up for a lot more as the industry has had a lot more time to evolve.
Where do I see things going? Oh man, let’s get a beer and talk about it. Data portability, Semantic Web, VRM, Project Natal, the sixth sense, augmented reality – try that to get your imagination started. I call it the age of ubiquity: ubiqitous connectivity, ubiqitous computing, ubiqitous information – where we have those separate things accessible anywhere and everywhere and when combined will change our lives. Information and communications, after all, are a fundamental aspect of being human that underlie everything we do – and so its impact will be more broadly applicable, obvious, and transformative.
Where’s the money in that? Are you kidding me?! The question is not how many dollars these changes can generate, but how many new industries will they spawn. We seriously don’t know what’s about to hit us in the next two decades for information technology, and clearly, neither do the Fund Managers.
Opera, the Norwegian browser with little under 1% market share of the English market, has made an interesting announcement. Following a much hyped mystery campaign, “Opera Unite” has been announced as a new way to interact with the browser. It transforms the browser into a server – so that your local computer can interact across the Internet in a peer-to-peer fashion. Or in simpler words, you can plug your photos, music and post-it notes into your Opera Unite installation – and be able to access that media anywhere on the Internet, be it another computer or your mobile phone. I view this as conceptually as an important landmark in data portability. The competing browser company Mozilla may lay claim to developing ubiquity, but Opera’s announcement is a big step to ubiquity the concept.
Implications: evolving the cloud to be more democratic I’ve had a test drive, but I’m not going to rehash the functionality here – there is plenty of commentary going on now. (Or better yet, simply check this video.) I don’t think it’s fair to criticise it, as it’s still an early development effort – for example, although I could access my photos on my mobile phone (that were stored on my Mac), I could not stream my music (which would be amazing once they can pull that off). But it’s an interesting idea being pushed by Opera, and it’s worth considering it from the bigger picture.
There is a clear trend to cloud computing in the world – one where all you need is a browser and theoretically you can access anything you need for a computer (as your data, applications and processing power are done remotely). What Opera Unite does, is create a cloud that can be controlled by individuals. It’s embracing the sophistication home users have developed into now that they have multiple computers and devices, connected in the one household over a home wireless network. Different individual computers can act as repositories for a variety of data, and its accessibility can be fully controlled by the individuals.
I think that concept is a brilliant one that brings it to the mass market (and something geeks won’t appreciate as they can already do this). It’s allowing consumers an alternative to storing their data, but still have it accessible “via the cloud”. As the information value chain goes, people can now store their data wherever they wish (like their own households) and then plug those home computers into the cloud to get the desired functionality they desire. So for example, you can store all your precious children pictures and your private health information on your home computer as you’ve chosen that to be your storage facility – but be able to get access to a suite of online functionality that exists in the cloud.
As Chris Messina notes, there is still an opera proxy service – meaning all your data connecting your home computer to your phone and other computers – still go through an Opera central server. But that doesn’t matter, because it’s the concept of local storage via the browser that this embodies. There is the potential for competing, open source attempts in creating a more evenly distributed peer-to-peer model. Opera Unite matters, because it’s implemented a concept people have long talked about – packaged in a dead easy way to use.
Implications: Opera the company
For poor little Opera, this finally gives it a focus to innovate. Its been squashed out of the web browser market, and its had limited success on the mobile phone (its main niche opportunity – although with the iPhone now facing a big threat). Google’s chrome is fast developing into the standard for running SaaS applications over the web. But Opera’s decision to pursue this project is innovating in a new area, and more inline with what was first described as the data portability file system and the DiSo dashboard.
Like all great ideas, I look forward to Unite being copied, refined, and evolve into something great for the broader world.
In the half century since the Internet was created – and the 20 years that the web was invented – a lot has changed. More recently, we’ve seen the Dot Com bubble and the web2.0 craze drive new innovations forward. But as I’ve postulated before, those eras are now over. So what’s next?
Well, ubiquity of course.
Let’s work backwards with some questions to help you understand.
Why do we now need ubiquity, and what exactly that means, requires us to think of another two questions. The changes brought by the Internet are not one big hit, but a gradual evolution. For example, “Open” has existed since the first days of the Internet in culture: it wasn’t a web2.0 invention. But “openess” was recognised by the masses only in web2.0 as a new way of doing things. This “open” culture had profound consequences: it led to the mass socialisation around content, and recognition of the power that is social media.
As the Internet’s permeation in our society continues, it will generate externalities that affect us (and that are not predictable). But the core trend can be identifiable, which is what I hope to explain in this post. And by understanding this core trend, we can comfortably understand where things are heading.
So let’s look at these two questions:
1) What is the longer term trend, that things like “open” are a part of?
2) What are aspects of this trend yet to be fully developed?
The longer term trend
The explanation can be found into why the Internet and the web were created in the first place. The short answer: interoperability and connectivity. The long answer – keep reading.
Without going deep into the history, the reason why the Internet was created was so that it could connect computers. Computers were machines that enabled better computation (hence the name). As they had better storage and querying capacities than humans, they became the way the US government (and large corporations) would store information. Clusters of these computers would be created (called networks) – and the ARPANET was built as a way of building connections between these computers and networks by the US government. More specifically, in the event of a nuclear war and if one of these computing networks were eliminated – the decentralised design of the Internet would allow the US defense network to rebound easily (an important design decision to remember).
The web has a related but slightly different reason for its creation. Hypertext was conceptualised in the 1960s by a philosopher and scientist, as a way of harnessing computers to better connect human knowledge. These men were partly inspired by an essay written in the the 1940s called “As We May Think“, where the chief scientist of the United States stated his vision whereby all knowledge could be stored on neatly categorised microfirm (the information storage technology at the time), and in moments, any knowledge could be retrieved. Several decades of experimentation in hypertext occurred, and finally a renegade scientist created the World Wide Web. He broke some of the conventions of what the ideal hypertext system would look like, and created a functional system that solved his problem. That being, connecting all these distributed scientists around the world and their knowledge.
So as it is clearly evident, computers have been used as a way of storing and manipulating information. The Internet was invented to connect computing systems around the world; and the Web did the same thing for the people who used this network. Two parallel innovative technologies (Internet and hypertext) used a common modern marvel (the computer) to connect the communication and information sharing abilities of machines and humans alike. With machines and the information they process, it’s called interoperability. With humans, it’s called being connected.
But before we move on, it’s worth noting that the inventor of the Web has now spent a decade advocating for his complete vision: a semantic web. What’s that? Well if we consider the Web as the sum of human knowledge accessible by humans, the Semantic Web is about allowing computers to be able to understand what the humans are reading. Not quite a Terminator scenario, but so computers can become even more useful for humans (as currently, computers are completely dependent on humans for interpretation).
What aspects of the trend haven’t happened yet?
Borders have been broken down that previously restrained us. The Internet and Hyptertext are enabling connectivity with humans and interoperability for computer systems that store information. Computers in turn, are enabling humans to process tasks that could not be done before. If the longer term trend is connecting and bridging systems, then the demon to be demolished are the borders that create division.
So with that in mind, we can now ask another question: “what borders exist that need to be broken down?” What it all comes down to is “access”. Or more specifically, access to data, access to connectivity, and access to computing. Which brings us back to the word ubiquity: we now need to strive to bridge the gap in those three domains and make them omnipresent. Information accessible from anywhere, by anyone.
Let’s now look at this in a bit more detail
- Ubiquitous data: We need a world where data can travel without borders. We need to unlock all the data in our world, and have it accessible by all where possible. Connecting data is how we create information: the more data at our hands, the more information we can generate. Data needs to break free – detached from the published form and atomised for reuse.
- Ubiquitous connectivity: If the Internet is a global network that connects the world, we need to ensure we can connect to that network irregardless of where we are. The value of our interconnected world can only achieve its optimum if we can connect wherever with whatever. At home on your laptop, at work on your desktop, on the streets with your mobile phone. No matter where you are, you should be able to connect to the Internet.
- Ubiquitous computing: Computers need to become a direct tool available for our mind to use. They need to become an extension of ourselves, as a “sixth sense”. The border that prevents this, is the non-assimilation of computing into our lives (and bodies!). Information processing needs to become thoroughly integrated into everyday objects and activities.
Examples of when we have ubiquity
My good friend Andrew Aho over the weekend showed me something that he bought at the local office supplies shop. It was a special pen that, well, did everything.
- He wrote something on paper, and then through his USB, could transfer an exact replica to his computer in his original handwriting.
- He could perform a search on his computer to find a word in his digitised handwritten notes
- He was able to pass the pen over a pre-written bit of text, and it would replay the sounds in the room when he wrote that word (as in the position on the paper, not the time sequence)
- Passing the pen over the word also allowed it to be translated into several other languages
- He could punch out a query with the drawn out calculator, to compute a function
- and a lot more. The company has now created an open API on top of its platform – meaning anyone can now create additional features that build on this technology. It has the equivalent opportunity to when the Web was created as a platform, and anyone was allowed to build on top of it.
The pen wasn’t all that bulky, and it did this simply by having a camera attached, a microphone and special dotted paper that allowed the pen to recognise its position. Imagine if this pen could connect to the Internet, with access to any data, and the cloud computing resources for more advanced queries?
Now watch this TED video to the end, which shows the power when we allow computers to be our sixth sense. Let your imagination run wild as you watch it – and while it does, just think about ubiquitous data, connectivity, and computation which are the pillars for such a future.
Trends right now enabling ubiquity
So from the 10,000 feet view that I’ve just shown you, let’s now zoom down and look at trends occurring right now. Trends that are heading towards this ever growing force towards ubiquity.
From the data standpoint, and where I believe this next wave of innovation will centre on, we need to see two things: Syntactic Interoperability and Semantic Interoperability. Syntactic interoperability is when two or more systems can communicate with each other – so for example, having Facebook being able to communicate with MySpace (say, with people sending messages to each other). Semantic interoperability is the ability to automatically interpret the information exchanged meaningingfully – so when I Google Paris Hilton, the search engine understands that I want a hotel in a city in Europe, not a celebrity.
The Semantic Web and Linked Data is one key trend that is enabling this. It’s interlinking all the information out there, in a way that makes it accessible for humans and machines alike to reuse. Data portability is similarly another trend (of which I try to focus my efforts), where the industry is fast moving to enable us to move our identities, media and other meta data wherever we want to.
…the whole point of working on open building blocks for the social web is much bigger than just creating more social networks: our challenge is to build technologies that enhance the network and serve people so that they in turn can go and contribute to building better and richer societies…I can think of few other endeavors that might result in more lasting and widespread benefits than making the raw materials of human connection and knowledge sharing a basic and fundamental property of the web.
The DiSo Project that Chris leads is an umbrella effort that is spearheading a series of technologies, that will lay the infrastructure for when social networking will become “like air“, as Charlene Li has been saying for the last two years.
One of the most popular open source pieces of software (Drupal) has now for a while been innovating on the data side rather than on other features. More recently, we’ve seen Google announce it will cater better for websites that markup in more structured formats, giving an economic incentive for people to participate in the Semantic Web. API‘s (ways for external entities to access a website’s data and technology) are now flourishing, and are providing a new basis for companies to innovate and allow mashups (like newspapers).
As for computing and connectivity, these are more hardware issues, which will see innovation at a different pace and scale to the data domain. Cloud computing has long been understood as a long term shift, and which aligns with the move to ubiquitous computing. Theoretically, all you will need is an Internet connection, and with the cloud, be able to have computing resources at your disposal.
On the connectivity side, we are seeing governments around the world make broadband access a top priority (like the Australian governments recent proposal to create a national broadband network unlike anything else in the world). The more evident trend in this area however, will be the mobile phone – which since the iPhone, has completely transformed our perception of what we can done with this portable computing device. The mobile phone, when connected to the cloud carrying all that data, unleashes the power that is ubiquity.
Along this journey, we are going to see some unintended impacts, like how we are currently seeing social media replacing the need for a mass media. Spin-off trends will occur which any reasonable person will not be able to predict, and externalities (both positive and negative) will emerge as we drive towards this longer term trend of everything and everyone being connected. (The latest, for example, being the real time web and the social distribution network powering it).
It’s going to challenge conventions in our society and the way we go about our lives – and that’s something that we can’t predict but just expect. For now, however, the trend is pointing to how do we get ubiquity. Once we reach that, then we can ask the question of what happens after it – that being: what happens when everything is connected. But until then, we’ve got to work out on how do we get everything connected in the first place.
Whilst innovation is always a good thing to see, let’s not forget some of the more innovative people in our world actually are the bad guys. Ladies and gentlemen – introducing real time spam.
The screening of the popular new release movie Star Trek was one of the biggest topics being discussed in the Twitter community (a community where the real time web is at its biggest right now). And the spammers have bombarded it.
The Real Time Web has massive opportunity for our society – especially when everyone is connected. But it also makes us vulnerable – as real time means a captured attention from the audience. And like a police car chase constantly trying to out the bad guys, trying to regulate the Real Time Web could be a challenge.
It’s a bold statement that you might need to get some background reading to understand my point of view (link above). However once you understand it, all the debates about who “owns” what data, suddenly become irrelevant. Basically access, just like ownership, is possible due to a sophisticated society that recognises peoples rights. Our society has now got to the point where ownership matters less now for the realisation of value, as we now have things in place to do more, through access.
Accessonomics: where access drives value
Let’s use an example to illustrate the point with data. I am on Facebook, MySpace, Bebo, hi5, Orkut, and dozens of other social networking sites that have a profile of me. Now what happens if all of those social networking sites have different profiles of me? One when I was single, one when I was in a relationship, another engaged, and another “it’s complicated”.
If they are all different, who is correct? The profile I last updated of course. With the exception of your birthdate, any data about you will change in the future. There is nothing ‘fixed’ about someone and “owning” a snap shot of them at a particular point of time, is exactly that. Our interests change, as do our closest friends and our careers.
Recognising the time dimension of information means that unless a company has the most recent data about you, they are effectively carrying dead weight and giving themselves a false sense of security (and a false valuation). Facebook’s $3 billion market value is not the data they have in June 2008; but data of people they have access to, of which, that’s the latest version. Sure they can sell to advertisers specific information to target ads, but “single” in May is not as valuable as “single” in November (and even less valuable than single for May and November, but not the months in between).
Facebook Connect and the peering network model
The announcement by Facebook in the last month has been nothing short of brilliant (and when its the CEO announcing, it clearly flags it’s a strategic move for their future, and not just some web developer fun). What they have created out of their Facebook Connect service is shaking up the industry as they do a dance with Google since the announcement of OpenSocial in November 2007. That’s because what they are doing is creating a permanent relationship with the user, following them around the web in their activities. This network business model means constant access to the user. But the mistake is equating access with the same way as you would with ownership: ownership is a permanent state, access is dependent on a positive relationship – the latter of course, being they are not permanent. When something is not permanent, you need strategies to ensure relevance.
When explaining data portability to people, I often use the example of data being like money. Storing your data in a bank allows you better security to house that data (as opposed to under your mattress) and better ability to reuse it (ie, with a theoretical debit card, you can use data about your friends for example, to filter content on a third party site). This Facebook Connect model very much appears to follow this line of thinking: you securely store your data in one place and then you can roam the web with the ability to tap into that data.
However there is a problem with this: data isn’t the same as money. Money is valuable because of scarcity in the supply system, whilst data becomes valuable from reusing and creating derivatives. We generate new information by connecting different types of data together (which by definition, is how information gets generated). Our information economy allows alchemists to thrive, who can generate value through their creativity of meshing different (data) objects.
By thinking about the information value chain, Facebook would benefit more by being connected to other hubs, than having all activity go through it. Instead of data being stored in the one bank, it’s actually stored across multiple banks (as a person, it probably scares you to store all your personal information with the one company: you’d split it if you could). What you want to do as a company is have access to this secure EFT ecosystem. Facebook can access data that occurs between other sites because they are party to the same secured transfer system, even though they had nothing to do with the information generation.
Facebook needs to remove itself from being a central node, and instead, a linked-up node. The node with the most relationships with other sites and hubs wins, because with the more data at your hands, the more potential you have of connecting dots to create unique information.
Facebook needs to think like the Byzantines
A lot more can be said on this and I’m sure the testosterone within Facebook thinks it can colonise the web. What I am going to conclude with is that that you can’t fight the inevitable and this EFT system is effectively being built around Facebook with OpenSocial. The networked peer model will trump – the short history and inherent nature of the Internet proves that. Don’t mistake short term success (ie, five years in the context of the Internet) with the long term trends.
There was once a time where people thought MySpace was unstoppable. Microsoft unbeatable. IBM unbreakable. No empire in the history of the word has lasted forever. What we can do however, is learn the lessons of those that lasted longer than most, like the forgotten Byzantine empire.
Also known as the eastern Roman empire, its been given a separate name by historians because it outlived its western counterpart by over 1000 years. How did they last that long? Through diplomacy and avoiding war as much as possible. Rather than buying weapons, they bought friends, and ensured they had relationships with those around them who had it in their self-interest to keep the Byzantines in power.
Facebook needs to ensure it stays relevant in the entire ecosystem and not be a barrier. They are a cashed up business in growth mode with the potential to be the next Google in terms of impact – but let’s put emphasis on “potential”. Facebook has competitors that are cash flow positive, have billions in the bank, but most importantly of all are united in goals. They can’t afford to fight a colonial war of capturing people identity’s and they shouldn’t think they need to.
Trying to be the central node of the entire ecosystem, by implementing their own proprietary methods, is an expensive approach that will ultimately be beaten one day. However build a peered ecosystem where you can access all data is very powerful. Facebook just needs access, as they can create value through their sheer resources to generate innovative information products: that, not lock-in, is that will keep them up in front.
Just because it’s a decentralised system, doesn’t mean you can’t rule it. If all the kids on a track are wearing the same special shoes, that’s not going to mean everyone runs the same time on the 100 metre dash. They call the patriarch of Constantiniple even to this day “first among equals” – an important figure who worked in parallel to the emperor’s authority during the empire’s reign. And it’s no coincidence that the Byzantine’s outlived nearly all empires known to date, which even to this day, arguably still exists in spirit.
Facebook’s not going to change their strategy, because their short-term success and perception of dominance blinds their eyes. But that doesn’t mean the rest of us need to make that mistake. Pick your fights: realise the business strategy of being a central node will create more heart-ache than gain.
It may sound counter intuitive but less control can actually mean more benefit. The value comes not from having everyone walk through your door, but rather you having the keys to everyone else’s door. Follow the peered model, and the entity with the most linkages with other data nodes, will win.
I just recorded a podcast with Duncan Riley and Bronwen Clune – two New Media innovators I greatly admire, to discuss what the future of media was. Unfortunately, the podcast recording came out battered and my normal analytical mind wasn’t in gear to add fruitfully to the discussion.
So Dunc and Bron, here I go: why I think advertising on the Internet has a future that will repeat the property bubble that fueled the world’s economic expansion these last few decades. (Y’know -the one that just burst.)
Advertising has been broken by the Internet
Let’s think about this from a big picture first: why do people advertise? It’s to get an outcome. Ignoring elections and government campaigns, the regular market economy has advertising so companies can make money. Pure and simple. Whether it be "brand" advertising which is a way of shaping perceptions for future sales, or straight-off-the-bat advertising pushing a product – the incentive for companies is to get a response. That response, ultimately, is to take that cash out of your wallet.
Now’s lets jump into the time machine and think about companies in the 1970s and 1980s – before this "Internet" thing became mainstream. How could companies get exposure for their products? Through the media of course. The mass media had captured audiences, and they were able to monetise this powerful position they had in society by forcing people to consume advertising as they were dealt with servings of information they actually wanted.
It worked in the past, because that’s how the world worked. That is of course, until the Internet and the Web completely transformed our world.
Companies jumped on the web thinking this was simply an extension of the mass media but so much better. And they were right to some extent – it was much better. A bit too good actually, because it now exposed the weaknesses of the concept of advertising.
Take for example one of the undergraduate students that works at my firm. Apparently, this 19 year old never watches television – but he is on top of all the main shows. He does this through peer to peer technology, where he is able to download his favourite shows. I asked him why does he do that and he responded quickly: "because I can avoid the ads". What’s happening with the Internet is that consumers can control the experience they have when consuming information now, unlike the past where they marched in line according to the programming schedule. The audience is no longer captive.
The Internet did another thing: it made advertising more accountable. In the past, savvy agencies would ‘segment’ the population and associate various mass media outlets as better being able to connect with the ‘target market’. To measure, print used circulation and readership – working out how many people bought the publication, and some number out of some Actuary’s head of how many people read that same copy (through statistical techniques of assessing patients in doctors’ surgeries, no doubt). Broadcasters on the other hand, would randomly call households and using statistical methods, would estimate the number of people that tuned in.
Perhaps the fact I took statistics for my undergraduate degree, is why I am so skeptical. Even my stats lecturer admitted it was bullshit – albeit in an ‘educated’ way. In relation to the mass media, the bigger issue was the fact this educated bullshit was not disaggregated. What I mean, was that when a newspaper has a readership of 100,000 people – there is a massive assumption that if you advertise in that publication, you will actually reach them. You might have bought a newspaper to read this one article your friend mentioned – and yet, your act of purchase enables the newspaper to justify all the other pages to advertisers with a simplistic metric.
The Internet completely changed this because we no longer are relying on statistics, but actual data collected. In the past, advertisers would get a plane and fly over an Amazonian forest they picked and pay to drop one million pamphlets hoping that at least 50,000 of their target market would catch the pamphlets and respond. Of course, indirect sales activity could indicate the effectiveness of a campaign, but in reality it was all a guess. Now with the Internet, a lot of the guesswork is not required any more – and quite frankly, advertising on the Net looks bad but the reality is that the truth has now been set free.
This is looking at it from an accountability point of view, but looking at it from a practical view as well, there are issues. The holy grail of advertising, is targeting. The reason being, if you can target an ad better, you are more likely to get a conversion. However there is a natural friction with targeted advertising and it’s called privacy. As I’ve said before, privacy is the speed hump for the attention economy.
Advertising on the net technologically offers a great ability to target, with marketers licking their lips at the opportunity. However this is coming with a complete misunderstanding, that technology may be an enabler but culture and society will be a breaker. People do not want better targeting. The thought that some company profiles you scares the crap out of people. Yes, I’ve even convinced myself that when advertising is relevant, it’s useful – but this is looking at it after the fact. The problem with targeted advertising, is that whilst it may run a world record 100 metre dash, it might not get the chance to actually get off the starting blocks. Just ask Facebook if you don’t believe me.
The structural impact the Internet has had to ruin advertising
The Internet is great for measuring – but there are a few too many measures. The lack of a consistent measurement system creates several problems. More significant is the fact that different types of Internet services compete based on what model works best for them. For example, pay per action is something advertisers love because they are getting a better return on their investment by seeing a follow through. This works with contextual advertising like the kind Google uses – it’s actually in Google’s interest for you to click off their pages.
Contrast that with video sites where a person is engaged with the content for ten minutes. An advertiser can’t compare ten minutes of engagement on a video site easily with click-actions on contextual advertising sites. What this creates is a vacuum, where the ad dollars will bias those that offer a better likelihood of making a sale. After all, why would you care about capturing someone’s attention for ten minutes, when you can simply pay for someone clicking on a link which is directly linked with an e-commerce sale on your site.
This creates a real problem, because it’s not an equal playing field to compete for the advertising. Certain types of services do better under different models. Banner advertising will die, not just because people are realising the usability issues surrounding banner blindness , or the fact that banner advertising is simply a copy and paste model of the mass media days , but because competing advertising models that better link them better to final sales will become more popular. When we hear about the great growth rates in online advertising, don’t forget to dig a little deeper because the real growth comes from search advertising which makes up about half of that.
There’s another structural problem with the Internet: there’s too much competition. In the mass media days, the media had an established relationship as "the" information distribution outlets of society. With the Internet, anyone can create a blog and become their own publisher. Additionally, the Internet is seeing growth not just in New Media ventures, but utility and commerce ventures as well. Same advertising pie theoretically (ignoring the long tail effect for a second, where small advertisers can now participate), but a lot more "distributors". This creates a fragmentation, where advertising dollars are being worn thin. It’s for this reason the larger internet services tend to manage to get by . Just looking at the face of it though, you know there’s a problem in the longer term even for the bigger players when you operate in such an environment.
It’s not just other Internet services to worry about however: it’s the advertisers themselves. In a world of information, democratised by search engines judging quality content – you as a publisher are on the same foot as the company paying for the ads. Why would Nike want to advertise on your website, when it can just improve its own search engine ranking? Companies can now create a more direct relationship with their customers and future customers – and they no longer need an intermediary (like the media) to facilitate that relationship. That’s a Big Deal. It’s not just search though – the VRM Project is doing exactly that, creating a system that will facilitate those relationships.
I could just as much put an argument in favour of online advertising, don’t get me wrong – there will be a lot of growth occuring still. But what I want to highlight, is that taking a step back at the facts, there is something seriously wrong with this model. If advertisers no longer need that intermediary to facilitate a relationship; if advertisers are chasing the industry down the tail of measureable ads that better link to a final sale; if the entire industry is not consistent and competing with each other both in inventory and in methods, in an infinite battle; and if consumers are no longer captive to the content distribution experience – it makes you question doesn’t it?
According to Nielsen over a year ago, about a third of all U.S. online advertising dollars spent in July came from the financial sector–with mortgage and credit reporting firms representing five of the top ten advertisers. Together, those companies spent nearly $200 million on search, display and other Web advertising, meaning that a slowdown would degrade fairly significant annual revenue streams. The writing was on the wall that long ago, what analysts are only now saying are troubled times for online advertising.
Just like we knew a year ago about the credit crunch, before a drastic turn of events turned it into the most dramatic economic shift in our world in our collective memories, so too will the advertising bubble burst. It will be years – perhaps decades – before this happens. However one thing is for sure – the Internet has not only ruined the newspaper, music and traditional software industries, but it’s also ruining the world of advertising. Like how newspapers, music and software are currently evolving into new models which we still are not sure where they will end up, so too will advertising be transformed.
Mr Online Advertising and Ms Media Company relying on it as a revenue model – you are growing on the basis of some very shaky foundations.
I’ll be happy to admit that in the past, I never understood the hype behind the mobile web. That is of course, before I bought the Nokia E61 – a brilliant phone I loved until it was stolen from me in April 2008. I had the phone since January 2007 with no regrets – only the hype surrounding the iPhone swayed me from (maybe) getting a new phone.
I used that phone for my news reading and e-mail (using the Gmail application, not the native phone installation) and I could understand how mobile was the future for technology innovation. Sure, it didn’t make me want throw my hands in the air and shout in excitement, but it made me understand amongst the naysayers of the mobile web, that there was potential. The defining thing for this realisation of mine, was the fact it had a massive screen, which was not common in phones before that.
So as my phone was stolen, I had the dilemma of buying a crappy new phone until the iPhone came out to Australia (potentially) several months later. But why bother I thought – I ended up buying the first generation iPhone over eBay. And lets just say, ever since, I’ve been throwing my hands in the air in excitement.
Using the iPhone is truly a transformative experience. Quite frankly, it sucks as a phone – no support for MMS; doesn’t syncronise with my corporate Lotus Notes calendar; and the call quality and hearing is consistently bad. But where it lacks as a phone, it makes up for it as a device. The fact I would use it over my laptop at home, just reflects how perfect it was: a portable computer that makes mobile browsing enjoyable. The native e-mail client made the process fun!
Naturally of course, I smashed the screen of my phone (which made the iPhone “just” a phone, because the screen is its core value proposition), and yesterday I finally got around to buying a new phone. I faced an issue: do I upgrade to an iPhone 3G (and boy, did I miss 3G so I was willing to upgrade just for that), or go back to my beloved Nokia’s, who perform one of the most valuable features for me which is the syncing with my calendar. It turns out Nokia had just released in Australia the N96 – which is basically the N95 but better. I can recall Lachlan Hardy swearing by the N95 and convincing me it was the perfect phone. Indeed, his view was supported by anecdotal evidence I found: it was as if Nokia said “heck, lets just chuck every single feature we have into the one phone and see what happens”.
So surely I thought, the one week old N96 which is the evolution of sex-on-a-stick N95 must be just as good, if not better? The experimenter in me went for it, because I knew I could get a better understanding about the mobile future.
From iPhone to Nokia
I absolutely hate it. I’ve barely even had the phone for 24 hours, and yet I am dying to get rid of the phone – I much prefer my cracked screen iPhone on GPRS than the N96. The iPhone compared to the Nokia N96 is like going from Windows Vista to Window’s 3.1 (the version BEFORE Windows 95). This phone, which has a market value of $1200; and had every feature under the sun you could dream for in a phone, is something I am willing to sacrifice. The interface of the iPhone has made me addicted like a heroin addict – I literally, cannot force myself to get used to the degraded user experience.
And I just find it amazing how it’s provoking such a strong reaction in me. Before the iPhone, this phone would have been heaven for me. It has every feature I dream for in a phone, yet the pixelated, text-driven graphical interface makes me all agitated and angry that Nokia hasn’t focused on what really matters.
Playing with the N96, using the browser and even the Gmail app to try to make it a more seamless user experience, reminds me again why I never got the mobile web before. Realistically, it will be a few years before the standard mobile evolves to a richer interface and so consequently, it’s too early to think the mobile web is about to take off now. However, the mobile and the 3D internet are both trends where I am willing to bet my life that it’s not a question of “if” but “when”, and whoever is in the right place at the right time at the emergence of the next upswing post this financial crisis, will be the new barons of the technology world.
The interface and user experience, are the missing link between connecting the vision of the early supporters, into the excitement of the mainstream of society. Mark my words, just like social networking sites such as MySpace and Facebook appeared to come out of nowhere to dominate our world, so too will the mobile future and the 3D Internet.
When I read the technology news, concepts about cloud computing still seem to be debated . I think to myself: you are kidding me right? I take a step back and think maybe the future won’t be like the current mantra, but then again, trends take time to materialise.
Scanning through my hard-disk, I could not help but laugh after I found a document I wrote to a friend in February 2006 – and as I said in the document "Those six points, as rough as they are, form core elements in my thinking on how I approach business on the Internet …[I've been thinking about it] since November 2003"
So below, is literally a copy and paste of that document that has seeds from way back in 2003 when I submitted a grant application for a business idea (ahem, no response obviously…). The fact that nearly half a decade has passed since I first synthesised these ideas (and no doubt, from reading of the thinkers of the day not just me being imaginative) means they are not flake predictions: they are real. Ready?
1. Digital future. All information ‚Äì news reports, television shows, educational text books, radio shows ‚Äì are being digitalised, coexisting with their analogue versions. Whether the digital replicas replace their analogue counterparts is pure speculation. But one fact we cannot ignore is that the possibility is there ‚Äì all content is now digital. And consumers will switch to the digital version if the value of the content consumed is better realised in digital form
Quick case study. Many pundits believe newspapers will not exist in 15 years. I know they won‚Äôt exist in 15 years, and I have spent three years thinking about this very point. At first I used to think digital replicas, as shown by http://www.newsstand.com, was what was going to transform the newspaper business. What I didn‚Äôt realise, is that the current newspaper experience far exceeds the digital replica (I was hung up on the idea of electronic paper [www.eink.com] ‚Äì which still remains a big possibility). But I knew the digital future was going to make the current newspaper business obsolete ‚Äì there is more value out of digitial. It only just hit me recently by observing my own behaviour‚Äì traditional newspapers are not going to be replaced by digital versions ‚Äì rather, the method¬¨ that people receive their news is going to change. And this fact is embodied by the recent acknowledgment of the world‚Äôs great newspapers of not being in the newspaper business anymore, but in the information business now. I used to read every single major newspaper, and several international newspapers, as I was a debater ‚Äì I was a heavy news consumer, and I still am. Today, I still follow the news very closely ‚Äì but I have not read a newspaper all year. Why? I receive all my information needs through websites, RSS feeds and blogs. A new method, made possible by the digital future. People means of consuming content will change because of digital.
2. Internet as infrastructure. It doesn‚Äôt take a genius to realise that the internet will be the core infrastructure of anything to do with information and communications. The power of the internet as infrastructure to communications and information unlocks opportunities that are transforming the world. Radio, TV, phone calls ‚Äì you name it ‚Äì can be done via the internet protocol now.
3. Content is king, distribution is queen ‚Äì but advertising is what pays for the cost of that sting. Google now makes more revenue than the three prime time television stations in the USA. In monetary terms, that‚Äôs about $10 billion a year. And yet, 99% of that revenue comes from one thing ‚Äì Google‚Äôs click-through advertising (about 45% from Google results, the rest from the Google network of publishers through adsense). HarperCollins announced last week that they are trialling a new business model of providing books for free but supported by advertising ‚Äì the consumer book business up until then was literally the only segment of media not reliant on advertising as a revenue model. Whilst broadcasting organisations make money from several sources, advertising is literally the backbone of their revenue. To make money out of any content, you place a huge reliance on advertising.
In short, if you want to make money out of content, you need to understand advertising
4. One-to-one advertising is the superior form of advertising. Partly due to technological factors, the mass media could only advertise through a one-to-many medium ‚Äì meaning one message to many. The digital-internet future has transformed that ability, by customising content on a one-to-one basis. If advertising, and content can be targeted to an individual‚Äôs personality profile and preferences, it allows for the value of the content to be maximised, with 1-to-1 advertising returning a higher return on campaigns – far superior than any other form of advertising. Superior because it can make advertising more relvant for consumers (ie, higher response rate), it can increase advertising inventory (mass media advertising is a bit like throwing pamphlets out of a plane, hoping the right people catch them – 1-to-1 means the right people get it at minimal cost and best of all, it creates better accountability which is what advertisers now demand.
5. The best business practice for one-to-one advertising is not there yet. The internet is the platform that enables one-to-one advertising, and yet, this opportunity has still not been fully exploited. There is a massive need in the market, for a means of providing personalised advertising far superior to the current technologies and methods. Google populised an innovative form of advertising through click-throughs. However internet click-throughs, despite providing more accountable and better targeted advertising, still lacks the ability to unleash the real power of one-to-one advertising. The power of the internet as a one-to-one advertising platform is still in its infancy
6. Privacy matters. Privacy is the right to determine what information is available about you, when you want it to be available, and to whom you want it available to. Current practices of companies who gain as much information about you through your sales history, your activity on the web, and the like ‚Äì are often doing so without the full knowledge of the consumer. It is information collected by spying on a consumer, and whilst some people retaliate by various measures (ie, fake information, anonymous proxies), there is great mistrust by the public in providing personal information, or rather, too much to one organisation. If information is to be used about people, there needs to be proper approval ‚Äì both for legal reasons (a business model cannot rely on consumer stupidity) but also for the integrity of the data (ie, a cooperative consumer will provide more reliable data)
Companies like Double Click who would collect your surfing history relied on placing a cookie on your computer ‚Äì what happens if you delete that cookie? And what happens if your dad, mum, and cousin from Brazil, use the same computer as you? That creates a fairly inconsistent ‚Äúprofile‚Äù of a person that is to be targeted
I had totally forgotten I had written that. And reading it now it’s a bit lame and I could probably extend on things a little bit – actually there are things I have actually written in blog posts this last year. Better still, I can provide actual evidence that validate these trends as advancing like the existence of the VRM project for advertising, the big clash with Facebook and privacy (and lets not forget the first time ), and Microsoft’s recent announcement about moving away from software (to pick but a few examples).
If this is what I was seeing in November 2003 as a naive university student absorbing what the industry trends were back then; February 2006 when I wrote to my friend what I thought he needed to consider about the future; and the fact I still agree with it in May 2008 – I think things are beyond speculation: these are long-term trends that are entrenched.
The invention of hypertext has been the most revolutionary thing since two previous technologies before: the printing press and the alphabet. Combined with computing and the Internet, we have seen a new world represented by the World Wide Web that has transformed entire industries in its mere 1915 year existence.
The web caught our imagination in the nineties, which became the Dot-Com bubble. Several years after the bust, optimism reawakened when the Google machine listed on the stock exchange ‚Äì heralding a new era dubbed ‚Äúweb2.0‚Äù. This era has now been recognised in the mainstream, elevated by the mass adoption of the social computing services, and has once again seen the web transform traditional ideas and generate excitement.
The web2.0 era is far from over ‚Äì the recent global recession however has flagged though that the pioneers of the industry are looking for something new. As the mainstream is rejuvenated by web2.0 like the Valley was not that long ago, it‚Äôs time to now look for what the next big thing will be. Innovation on the web is apparently flattening. Perhaps it has ‚Äì but the seeds of the next generation of innovation on the web are already here.
Controversy of the meaning of web2.0 ‚Äì and what its successor will be ‚Äì should not distract us. We are seeing the web and associated technologies evolve to new heights. So the question is not when web2.0 ends, but what are we seeing now, that will dominate in the future?
‚Ä¢ The mobile web. The mobile phone is now evolving into a generic entertainment device, becoming a new computing device that extends the reach of the internet. First with the desktop computer, and then with the laptop computer ‚Äì new opportunities presented themselves in the way we could use computers. The use of this new computing platform will create new opportunities that we have only scratched the surface.
‚Ä¢ The 3D web. Visit second life, the virtual world, as you quickly note the main driver of activity is sex and that it‚Äôs just a game. However, porn and games have spearheaded a lot of the innovation of technology in the past. The 3D web is now emerging with four separate but related trends: virtual worlds, mirror worlds, augmented reality and lifelogging.
‚Ä¢ The data web. Data has now become a focus in the industry. The semantic web, eventually, will allow a weak form of artificial intelligence that will allow computer agents to work in an automated fashion. Vendor Relationship Management is changing the fundamental assumptions of advertising, with a new way of how we transact in our world. Those trends, when combined with the drive for portability of peoples data, is having us see the web in a new light with new potential. Not as a collection of documents, and not as a platform for computing, but as a database that can be queried.