Tag Archive for 'VRM'

Online advertising – a bubble

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.

Concluding thoughts
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.

Advertising on the Internet needs innovation

On the weekend, I caught up with Cameron Reilly of the Podcast network , and he was telling me about his views on monetising podcasts. It got me thinking again about those things I like to think about: how content can be monetised. Despite the growth in online advertising which is tipped to be $80 billion, I think we still have a lot more innovation to go with revenue models, especially ones that help content creators.

Advertising is a revenue stream that has traditionally enabled content-creators to monetise their products, in the absence of people paying a fee or subscription. With the Internet, content has undergone a radical changing of what it is – digital, abundant, easily copied – whilst the Internet has offered new opportunities for how advertising is done. However, the Internet has identified the fundamental weaknesses of advertising , as consumers can now control their content consumption, which allows them to ignore embedded advertising altogether. Content on the other hand, still remains in demand, but means of monetising it are slipping into a free economy which is not sustainable. I make that point to illustrate not that professional content creation is a sunset industry – but rather there’s a big market opportunity as this massive industry needs better options.

time mag

"Hey man, there’s this new thing called the Internet. Sounds pretty cool"

One of the biggest innovations in advertising (and enabled by the Internet) is of contextual search advertising. This has been popularised by Google, which now makes 98% of its $17 billion revenue from these units. This advertising dominates online advertising (40% of total) because of its pull nature, whereby key-words stated by a consumer in effect state their intention of what they are interested or would like to purchase. Whilst this is a highly efficient form of advertising, it also has its weaknesses – for example, it is not as effective outside of the search engine environment. Google makes 35% of its revenue from the adSense network , where these contextual ads are placed on peoples personal websites. Evidence from high traffic bloggers suggests they barely make enough money through this type of advertising. Another point to consider is that aspects of the Google network include significant partnership agreements like the one with AOL which accounts for 10% of Googles revenue (this is a 2005 figure which has likely changed, but Google does state in their 2007 report "Our agreements with a few of the largest Google Network members account for a significant portion of revenues derived from our AdSense program. If our relationship with one or more large Google Network members were terminated or renegotiated on terms less favorable to us, our business could be adversely affected.". AOL most recently reported for Q1 2008 half a billion dollars largely from search advertising ).

Other attempts at creating more efficient advertising which have existed for over a decade, have come in the form of profiling or behavioural tracking. However, these forms of advertising has also highlighted the growing awareness of consumer privacy being eroded, and is under heavy scrutiny by activist groups and government. Facebook is a company that is best posed to deliver new forms of advertising because of the rich profiling data it has, but it itself has faced massive backlash .

My view is that the majority of online advertising for successful individual publishers at least, has largely come from traditional approaches to advertising – a masthead blog with a sales team that uses display advertising. How effective this display advertising is is debateable with widespread banner blindness and consumer control over their content, but it would appear that this is more a case of advertisers seeing this as the least bad on the overall scale of opportunities. The fact it replicates the mass media approach of number of unique consumers viewing the content, and not the types of users, means this isn’t anything new other than being done in a digital environment.

Digital content is in need of a better monetisation system.
Targeted advertising is the most efficient form, yet consumer privacy is a growing force preventing this. What we need, is not a new advertising technology, but a new way of thinking about advertising – in a way that can help the content economy rather than riding on it without giving benefit. Contextual advertising sounds great in theory as it calculates key-word frequency of words on a website, to match it to a key word ad – but it’s proving in practice these ads are not very relevant. Yet trying to think of a smarter way to advertise, may be the wrong question – perhaps half the problem itself is advertising as a concept?

perspective

Are we running down a tunnel, only to find there is nothing there?

Content which comes in the form of news (historical and breaking), analysis, and entertainment can be monetised via a persons attention or through a transaction (ie, subscription, fee, etc). Both this approaches have different barriers.

– Attention: The key driver is increased dollars per unique person, over a period of time. The barriers to this approach is the challenge of identifying the individual in a way that gives advertising that is highly relevant and will result in a conversion. In other words, privacy privacy privacy.

– Alternative payment: Requiring consumers to pay for content is a barrier due to the paid wall. What is more problematic for digital content, is that the ability to replicate it freely makes it not just easy to do for the masses but has created a culture of if it’s not free, it’s not worth purchasing unless its really necessary. There needs to be a strong value proposition for a consumer to purchase content, and in the absense of a brand and marketing, the restriction of what value the content offers is a barrier for consumer demand as they don’t know what they are missing out on.

So as you see above, content creators are in a difficult position. Charging people reduces their opportunity unless they are really established, but even then, due to the digital environment they don’t have any control over subsequent distribution (with rampant piracy). Yet advertising is fraught with being irrelevant and hence not effective (so advertisers go to other forms) and any attempts to make it more relevant, gets held back by the concerns of privacy advocates (and rightly so). Whilst the Internet parades itself as an advertising growth machine, it’s growing in new areas but not the old areas that have traditionally been the medium for advertisers.

This advertising growth is largely being driven through utility computing products that aim to make information retrieval more efficient (ie, search). However, the growth for the content creators, is not happening. As Cam was telling me, in a market like Australia – small content organisations like TPN and Bronwen Clune ‘s Norgs , don’t have access to the big end of town for a sales team. And he didn’t have to tell me, those Google ads for the smaller guys, are not enough to pay the bills. That small to middle end is not being really catered for.

But before you jump on the phone and create some mid-tier advertising network that caters for a niche, think about the real problem: content creators need a better solution to monetise their content. But advertisers also need a better way of selling, other than some slick-talking sales person who can sell ads on pageviews (a broken model with weak alternatives ) They need advertising that is suited for their product, but the market now includes other products media outlets never had to compete with like marketplaces now happening online and utility computing products. Whilst the technology community obsesses about search , let’s also remember we have yet to see a new way to monetise content that is superior to the old world. Contextual advertising of text is the latest new thing area, but that technique is nearly a decade old. As I prove above, outside of the search environment, it is showing to not be that effective.

Where is the innovation going to come from? Not through technology but with a new paradigm shift like how content creators operate . New ways of thinking about the way we ‘sell’ like what the VRM Project is challenging. But perhaps more fundamentally, is an understanding that the holy grail of targeted advertising has got a speed hump called privacy – and that may actually be a sign of not going faster towards better targeting, but changing the vehicle all together.

Emerging trends? Nope – its been a long time coming

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 – news reports, television shows, educational text books, radio shows – 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 – 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’t 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 – you name it – can be done via the internet protocol now.


3. Content is king, distribution is queen – 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’s about $10 billion a year. And yet, 99% of that revenue comes from one thing – Google’s 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 – 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 – 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’s 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 Рfar 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 Р1-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 – 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 – 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.

What is the DataPortability Project

When we created the DataPortability workgroup in November 2007, it was after discussion amongst a few of us to further explore an idea; a vision for the future of the social web. By working together, we thought we could make real change in the industry. What we didn’t realise, was how quickly and how big the attention generated by this workgroup was to be. A press release has been released that details the journey to date, which highlight’s some interesting tidbits. What I am going to write below, are how my own thoughts have evolved over the last few months, and what it is that I think DataPortability is.

1) Getting companies to adopt open, existing standards
RSS , OpenID , APML , oAuth , RDF , and the rest. These technologies exist, with of which have been around for many years. Everyone that understands what they are, know that they rock. If these standards are all so great – why hasn’t the entire technology industry adopted them yet? Now we just need awareness, education and in some cases pressure on the industry heavies to adopt them.

2) Create best practices of implementing these standards
When you are part of a community, you are in the know, and don’t realise how the outside world looks in. Let the standards communities focus their precious energies on creating and maintaining the technologies; and DataPortability can help provide resources for people to implement them. Is providing PHP4 support for oAuth really a priority? It isn’t for them – but by pooling the community with people that have diverse skillsets and are committed to the overall picture, it has a better chance of happening.

3) Synthesise these open standards to play nice with each other.
All these different communities working in isolation have been doing their own thing. An example is how Yadis-XRDS are working on service discovery and have a lacklustre catalogue. Do we just leave them to do their own thing? Does someone else in Bangalore create his own catalogue? (Which is highly likely given the under-exposure of this key aspect to groups needing it for the other standards, and the current state its in). Thanks to Kaliya for mentioning that the XRDS guys have been more then proficient in working with other groups – "how do you think their spec is part of the OpenID spec?". Julian Bond goes on to say: "Yadis-XRDS is only months old and XRDS-Simple is literally days old…Having trouble thinking of a community that is working in isolation. And that isn’t likely to be hugely offended if you suggested it. " So let me leave the examples here, and just say the DataPortability Project when defining technical and policy blueprints, can identify issues and from the bigger picture perspective focus attention on where it’s needed. By embracing the broader community, and focusing our attention on weaknesses, we can ensure no one is reinventing wheels .

4) Communicate all the good things the existing communities are doing, under the one brand, to the end user.
RSS is by far the most recognised open standard. Have you ever tried explaining RSS to someone who is outside of the tech industry? I have. Multiple times. It’s like I’ve just told them about the future with flying cars and settlements on Mars. I’ve done it in in the corporate world, to friends, family, girls I date, guys I weight train with and anyone else. Moving onto OpenID – does anyone apart from Scoble and the technorati who try all the webservices they can, really care? Most people use Facebook, Hotmail (the cutting edge are using Gmail) and that’s it. On your next trip to Europe ask a cultured French (wo)man if they know what OpenID is; why they need it; what they can do with it. Now try explaining RSS to the mix. And APML. And oAuth. Bonus if you can explain RDF to yourself.

Wouldn’t it be just easier if you explained what DataPortability is, and explained the benefits that can be achieved by using all these standards? Standards are invisible things that consumers shouldn’t need to care about; they just care about the benefits. Do consumers care about the standards behind Wi-Fi, as defined by Zero-conf – or do they care about clicking "enable wireless" on their laptop and them connecting to the Internet. If you are going around evangelising the technical standards, the only audience you will get are the corporates in IT departments, who couldn’t care less. The corporate IT guys respond to their customer/client facing guys, who in turn respond to consumers – and consumers couldn’t care less on how its done, but just what they can do. Have the consumer channel their demand, and it benefits the whole ecosystem.


The new DataPortability trustmark

It has been said the average consumer doesn’t care about DataPortability. Of course they don’t – we are still in the investigation phase of the Project ; which later on will evolve to the design phases and then evangelising phases. We know people would want RSS, oAuth, and the rest of the Alphabet soup – so lets use DataPortability as a brand that we can communicate this. Sales is about creating demand – lets coordinate our ‘selling’ to make it overwhelming – and make it easy for consumers to channel that want in a way they can relate to. You don’t say "oAuth"; you say "preventing password theft" to them instead.

5) Make the business case that a user should get open access to their data
Why should Facebook let other applications use the data it has on its servers? Why should google give up all this data they have about their users to a competitor? Why should a Fortune 500 adopt solutions that decentralise their control? Why should a user adopt RDF on their blog when they get no clear benefit from it? Is a self-trained PHP coder who can whack something together, going to be able to articulate that to the VC’s?

The tech industry has this obsession that nothing gets done unless the developers are on board. No surprises there – if we don’t have an engineer to build the bridge, we are going to have to keep jumping off the cliff hoping we make it to the other side. But at the same time, if you don’t have the people persuading the people that would fund this bridge; or the broader population about how important it is for them to have this bridge – that engineer can build what he wants but the end result is that no one will ever walk on it. Funny how web2.0 companies suck at the revenue model thing : overhype on the development innovation, with under-hype on the value-proposition to the ordinary consumer who funds their business .

Developers need to be on board because they hassle their bosses and sometimes that evangelising from within works; but imagine if we get the developers bosses bosses on board because some old bear on the board of directors wants DataPortability after his daughter explained it to him (the same person that also told him about Facebook and Youtube). I can assure you, as I’ve seen it first hand with the senior leadership at my own firm, this is exactly what is happening.

Intel is one of the best selling computer-chip companies in the world. Do you really think as a consumer I care about what chip my computers works on? Logically – no. But "Intel’s Inside" marketing campaign gave them a monopoly, because end consumers would ask "does it have intel inside?" and this pressure forced Intel’s customers (IBM and the rest) to actually use Intel. Steve Greenberg corrects me by saying "The Intel Inside campaign came a decade after Intel took over the world. It wasn’t what got them there. It was in response to Microsoft signaling that they liked AMD. Looked like AMD was going to take off… but then they didn’t". So my facts were slightly wrong, but the point still remains.
At the same time, it isn’t just political pressure but its also to educate. I genuinely believe opening up your data is a smart business strategy that will change the potential of web services.

You make people care by giving them an incentive to do it (business opportunities; customer political pressure; peer pressure as individuals and an industry which later evolve to industry norms). The semantic web communities, the VRM communities, the entire open standards communities – all have a common interest in doing this. DataPortability is culture change on an industry wide level, that will improve the entire ecosystem. Apparently innovation has died – I say it’s just beginning .

Information overload: we need a supply side solution

About a month ago, I went to a conference filled with journalists and I couldn’t help but ask them what they thought about blogs and its impact on their profession. Predictably, they weren’t too happy about it. Unpredictably however, were the reasons for it. It wasn’t just a rant, but a genuine care about journalism as a concept – and how the blogging “news industry” is digging a hole for everyone.

Bloggers and social media are replacing the newspaper industry as a source of breaking news. What they still lack, is quality – as there have been multiple examples of blogs breaking news that in the rush to publish it, turns out it was in fact fallacious . Personally, I think as blogging evolves (as a form of journalism) the checks and balances will be developed – such as big names blogs with their brands, effectively acting like a traditional masthead. And when a brand is developed, more care is put into quality.

Regardless, the infancy of blogging highlights the broader concern of “quality”. With the freedom for anyone to create, the Information Age has seen us overload with information despite our finite ability to take it all in. The relationship between the producer of news and consumer of news, not only is blurring – but it’s also radically transforming the dynamics that is impacting even the offline world.

Traditionally, the concept of “information overload” has been relegated as a simple analysis of lower costs to entry as a producer of content (anyone can create a blog on wordpress.com and away you go). However what I am starting to realise, is the issue isn’t so much the technological ability for anyone to create their own media empire, but instead, the incentive system we’ve inherited from the offline world.

Whilst there have been numerous companies trying to solve the problem from the demand side with “personalisation” of content (on the desktop , as an aggregator , and about another 1000 different spins), what we really need are attempts on the supply side, from the actual content creators themselves.

info overload

Too much signal, can make it all look like noise

Information overload: we need a supply side solution
Marshall Kirkpatrick , along with his boss Richard McManus , are some of the best thinkers in the industry. The fact they can write, makes them not journalists in the traditional sense, but analysts with the ability to clearly communicate their thoughts. Add to the mix Techcrunch don Michael Arrington , and his amazing team – they are analysts that give us amazing insight into the industry. I value what they write; but when they feel the stress of their industry to write more, they are not only doing a disservice to themselves, but also to the humble reader they write to. Quality is not something you can automate – there’s a fixed amount a writer can do not because of their typing skills but because quality is a factor of self-reflection and research.

The problem is that whilst they want, can and do write analysis – their incentive system is biased towards a numbers system driven by popularity. The more people that read and the more content created (which creates more potential to get readers) means more pageviews and therefore money in the bank as advertisers pay on number of impressions. The conflict of the leading blogs churning out content , is that their incentive system is based on a flawed system in the pre-digital world, which is known as circulation offline, and is now known as pageviews online.

A newspaper primarily makes money through their circulation: the amount of physical newspapers they sell, but also the audited figures of how many people read their newspaper (readership can have a factor of up to three times the physical circulation ). With the latter, a newspaper can sell space based on their proven circulation: the higher the readership, the higher the premium. The reason for this is that in the mass media world, the concept of advertising was about hitting as many people as possible. I liken it to the image of flying a plane over a piece of land, and dropping leaflets with the blind faith that of those 100,000 pamphlets, at least 1000 people catch them.

It sounds stupid why an advertiser would blindly drop pamphlets, but they had to: it was the only way they could effectively advertise. For them to make sales, they need the ability to target buyers and create exposure of the product. The only mechanism available for this was the mass media as it was a captured audience, and at best, an advertiser could places ads on specialist publications hoping to getter better return on their investment (dropping pamphlets about water bottles over a desert, makes more sense than over a group of people in a tropical rainforest). Nevertheless, this advertising was done on mass – the technology limited the ability to target.

catch the advert

Advertising in the mass media: dropping messages, hoping the right person catches them

On the Internet, it is a completely new way to publish. The technology enables a relationship with a consumer of content, a vendor, a producer of content unlike anything else previously in the world. The end goal of a vendor advertising is about sales and they no longer need to drop pamphlets – they can now build a one on one relationship with that consumer. They can now knock on your door (after you’ve flagged you want them to), sit down with you, and have a meaningful conversion on buying the product.

“Pageviews” are pamphlets being dropped – a flawed system that we used purely due to technological limitations. We now have the opportunity for a new way of doing advertising, but we fail to recognise it – and so our new media content creators are being driven by an old media revenue model.

It’s not technology that holds us back, but perception
Vendor Relationship Management or (VRM) is a fascinating new way of looking at advertising, where the above scenario is possible. A person can contain this bank of personal information about themselves, as well as flagging their intention of what products they want to buy – and vendors don’t need to resort to advertising to sell their product, but by building a relationship with these potential buyers one on one. If an advertiser knows you are a potential customer (by virtue of knowing your personal information – which might I add under VRM, is something the consumer controls), they can focus their efforts on you rather than blindly advertising on the other 80% of people that would never buy their product). In a world like this, advertising as we know it is dead because we know longer need it.

VRM requires a cultural change in our world of understanding a future like this. Key to this is the ability for companies to recognise the value of a user controlling their personal data is in fact allowing us new opportunities for advertising. Companies currently believe by accumulating data about a user, they are builder a richer profile of someone and therefore can better ‘target’ advertising. But companies succeeding technologically on this front, are being booed down in a big way from privacy advocates and the mainstream public. The cost of holding this rich data is too much. Privacy by obscurity is no longer possible, and people demand the right of privacy due to an electronic age where disparate pieces of their life can be linked online

One of the biggest things the DataPortability Project is doing, is transforming the notion that a company somehow has a competitive advantage by controlling a users data. The political pressure, education, and advocacy of this group is going to allow things like VRM. When I spoke to a room of Australia’s leading technologists at BarCamp Sydney about DataPortability, what I realised is that they failed to recognise what we are doing is not a technological transformation (we are advocating existing open standards that already exist, not new ones) but a cultural transformation of a users relationship with their data. We are changing perceptions, not building new technology.

money on the plate

To fix a problem, you need to look at the source that feeds the beast

How the content business will change with VRM
One day, when users control their data and have data portability, and we can have VRM – the content-generating business will find a light to the hole currently being dug. Advertising on a “hits” model will no longer be relevant. The page view will be dead.

Instead, what we may see is an evolution to a subscription model. Rather than content producers measuring success based on how many people viewed their content, they can now focus less on hits and more on quality as their incentive system will not be driven by the pageview. Instead, consumers can build up ‘credits’ under a VRM system for participating (my independent view, not a VRM idea), and can then use those credits to purchase access to content they come across online. Such a model allows content creators to be rewarded for quality, not numbers. They will need to focus on their brand managing their audiences expectations of what they create, and in return, a user can subscribe with regular payments of credits they earned in the VRM system.

Content producers can then follow whatever content strategy they want (news, analysis, entertainment ) and will no longer be held captive by the legacy world system that drives reward for number of people not types of people.

Will this happen any time soon? With DataPortability, yes – but once we all realise we need to work together towards a new future. But until we get that broad recognition, I’m just going to have to keep hitting “read all” in my feed reader because I can’t keep up with the amount of content being generated; whilst the poor content creators strain their lives, in the hope of working in a flawed system that doesn’t reward their brilliance.