Decoupling Digital Advertising

Frederic Filloux of the Washington Post published an article today titled “Why is digital advertising so lousy? Industry is too smug to innovate“. He goes on to say “First, I’m in the same boat as many of my friends in the news media: A significant part of my income, past and future, rides on advertising. Therefore, my pragmatic self-interest is to see digital advertising thrive.”

There are two competing forces that hinder the lack of innovation in digital advertising. The notion that all content wants to be free and the notion that the only way to monetize content is with ad impressions and clicks. These are two major problems that continue to be fueled by the leading advertising agency in the digital space. As long as everyone continues to play along and support this 800 pound gorilla there won’t be any innovation in this space any time soon.

This notion that content should be free could change if users are able to profit on the web. The only way to achieve that is to change the flow of advertising dollars into the hands of consumers. Advertising is still the best way to effectively monetize digital media and web services, just not through clicks and impressions.

Another article making news this weekend titled “The Government Wants To Save Newspapers And Media Moguls” by Jeff Jarvis touches on some of the very same issues that are affecting digital media. People need to start realizing that there is a steep price to pay for consuming free content and digital media. The current economics of digital media is more concerned about quantity rather then quality. This drive for pay views and ad impressions is fueling and shaping our digital landscape, and unfortunately only a few are benefiting from this model.
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Freeloading & Digital Media

The tendency of people to take resources without paying for them may sound like the best approach for digital economics, but the reality is that only a select few really benefit.

The current economics of using advertising to pay for digital media is primarily controlled and operated by a single advertising agency. This means they ultimately determine and dictate how this money flows.

We believe that advertising is still the best way to effectively monetize digital media and web services, but we don’t believe that freeloading is the best approach for digital economics. In fact we believe all users should have to pay for all the content they consume and web services they use. Please let me explain.

Right now it’s hard to justify charging users to pay for content and web services. I wouldn’t pay for it either! We already pay for broadband access which is not cheap. Now what if you got paid to use the web? What if the money that advertisers pay to help monetize digital media and web services starts flowing in your direction and is ultimately determined and dictated by you and not that advertising agency. What if now you have money to pay for all the content you consume and web services you use and maybe even your broadband bill. Now we’re talking!

Freelaoding is bad for digital economics people. It’s time we realize that “free” has a price.

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The Price of Freemium

I learned long ago that nothing in life is free. As much as we like to think that all the content we consume online is free, the reality is that someone somewhere is paying for it. Today most users are not willing to pay for online content because they have been spoiled and fooled for so long. Startups and industry participants continue to fuel and support this illusion by building and launching web services based on a freemium model.

Google is the poster child of the freemium business model. Their success has created the illusion that content and web services should aways be free. And while the freemium model is great and works extremely well for Google the reality is that it’s not so great for everyone else. What about Facebook and Twitter you may ask? The freemium model appears to be working just fine for them. Let me repeat myself, nothing in life is free.

Services such as Facebook and Twitter depend on your data and content to make money just as much as Google does. That’s right people, I said “Your data and content”. Without your data and content there is no Google, Facebook, or Twitter. So they are making money off my data and content? Yes! Your thoughts, your posts, your pictures, your videos, your friends, and your interests are all worth money. Did you really think it was free?

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Sharing Advertising Revenue with Web Users

Giving web services away for free in exchange for ad supported revenue has been the de facto standard for most web 2.0 properties.

While the concept works great for Google and a small number of web services, it does not work for the majority of web services. The ad revenues are just not enough to support a legitimate business. Unfortunately this is unlikely to change anytime soon unless there is a fundamental shift in how we think about advertising and the web.

In the past, most local businesses relied on print advertising a.k.a. junk mail as a cost effective means of promoting their products or services. Mailing out letters, post cards, and flyers was considered to be the norm. While most businesses considered the standard 1% – 2% response rate a successful campaign, most people would never even bother to open or read these promotions. Today the same can be said about online advertising. Most web users have learned to ignore ads unless they are in purchase mode searching for a particular good or service.

Grabbing the consumer’s attention has always been a challenge. So what can we do differently to grab their attention? We can pay them! Money is a motivator. Transferring the money from advertisers directly to the consumer’s pockets may sound far fetched to you, but this is our only hope of effectively monetizing the majority of web services out there including digital media. How? Let me explain. Charging users for web services has failed for the majority of businesses. Why? Users have been conditioned to think the web is free and Google has conditioned web site owners to think web services are suppose to be free. Print media was never free so why should digital media be free? Sure it’s much cheaper to produce digital media but does that justify giving it away for free. How do we change those perceptions? Give web users the advertising money and charge web users some of that money for access to your web service. It’s that simple and surely justifiable.

This would allow advertisers to bypass the gatekeepers and directly pay consumers money for their time and attention. Making this happen won’t be easy, but it’s our only hope for a truly “free” and “open” web.
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Noble Advertising Concept Banned By Facebook

So here we are a tiny little startup trying to make a difference in the world in our attempt to create something of value for consumers and advertisers.  We officially launched this week to give social web users an opportunity to get paid for participating in social media ad campaigns relevant to their interests and characteristics. We figured with all the privacy concerns around social networks going on and the battle over who owns our interests on the Web intensifying, why not give social web users the ability to take ownership over some of these issues.

With companies like Facebook and Twitter trying to capitalize on our interests and data, we thought it would make sense to create something that enabled users to earn their share of the pie.  Is there something wrong with this?

Apparently there is something wrong with this.  According to Facebook we are a get rich quick and money making opportunity that offer compensation for little or no investment.  Really?  Facebook has concluded that we are nothing more then some scheme and that their users should not be exposed to our service.  The gatekeeper has spoken on behalf of its 400+ million users.

So are we really a get rich quick and money making opportunity that offer compensation for little or no investment?  You certainly aren’t going to get rich quick using AdShouts, I can guarantee you that!  You won’t even get rich slowly let alone quick.  Are we a money making opportunity that offer compensation for little or no investment?  Sure we are a money making opportunity in the same sense that Facebook Credits, affiliate programs, and Google AdSense are money making opportunities.

So now we sit here scratching our heads trying to figure out what is so wrong about what we are trying to do.  We thought we were on to something wonderful and full of promise but apparently we are not.  Lets take this step-by-step.  AdShouts are completely opt-in.  We don’t force or trick anyone into signing up.  And if you do sign-up and don’t like us for whatever reason you can always opt-out.  We think this is fair and reasonable.  Lets move on.  AdShouts allows users to select their favorite consumer brands and topics of interest among a list of predefined entries.  If you don’t see anything of interest, you can always suggest something new.  Nothing out of the ordinary here either.  AdShouts allows users to set the minimum price for participating in social media ad campaigns.  So if your 5 seconds of time to participate in a social media ad campaign is worth $50 then you would enter in $50.00 as your minimum bid.  What does this mean?  This means that an advertiser would have to pay you $50 before you will ever receive and acknowledge their social media ad.  We don’t see anything wrong with this.  In fact this is the beauty of AdShouts, it empowers the user.

So here we have a service that gives both users and advertisers a direct relationship being banned by Facebook.  It’s time for you to decide. Why do you think Facebook banned AdShouts?
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