It still boggles my mind how many startups think that advertising is the monetization vehicle of choice. Didn’t we already do that during web 1.0, eyeballs are not the be all and end all.
IBM just completed a survey called “the end of advertising“, and in it Read/Write web reports that 11% of users say they would pay for a “youtube premium” account to avoid advertising. This would yeld 100 million in additional revenue.
I’ve always thought the Flickr “pro account” idea was one of the best and simplest examples of monetization in web 2.0 - provide something of value that your most passionate users will pay for, let them subsidize the usage by more casual users. This is of course in direct opposition to most product strategies which take the “safe” route and create a product for the “majority” of their users, which as Seth Godin will tell you is the risky thing to do.
Sure, but asking people how they will behave in the future doesn’t accurately predict their actual behavior when that future comes. My guess is that actual uptake of YouTube Premium would depend greatly on pricing and additional benefit; if the sole benefit was ad avoidance, the price would have to be quite low to get even 5%.
Personally, I think companies like 37 Signals get it right (identical to Flickr) and I also think smaller, targeted ad networks like The Deck (http://www.coudal.com/deck/) in conjunction with paid services may be the way of the future.
What remains to be seen is if the dynamics of social media and its influence on all online mediums will support our current notions of online advertising. I suspect they won’t and that online marketers that suceed will have think more holistically about how they represent themsevles in both the physical and online world.
Chris Bernard, User Experience Evangelist, Microsoft
Funny, I read that IBM report this AM, and it made me rewrite the headline to read “The End of Really Bad Advertising”
In it, I talk about 2 trends that will help shape our future in advertising.
http://digitaldigs.wordpress.com/2007/11/13/the-end-of-really-bad-advertising/
Karl,
Thanks for the insightful post and the IBM links. It’d be interesting to build a chart with all the social media startups presumed to profit from advertising, then highlight those that actually make a profit that way. Would it be less than 10%?
Advertising isn’t the answer. Utility is. Content is. Something you can’t get anywhere else. You can get advertising anywhere, which is why it’s worthless in the context of so many social media entities.
Tim
Agree with Tim. no matter what content will be king. User might pay premium accounts and still will get adverising -maybe better or just form the site-. Imagine a world without it.
As a friend here in Mexico used to say “advertising is so important that after a bit more of two thousand years the Catholic church still call for people sounding it’s bells”.
Joe, nice article!!
talk about 2 trends that will help shape our future in advertising.
@Jon yeah, I totally agree that a survey is not a predictor of behavior, of course a “pro” service would have to provide better features etc. Youtube could provide things like longer videos, higher quality videos (youtube does some horrible compression), and maybe placement considerations, better metrics, maybe have a video featured once a month on the home page. The options are endless, again the point is to create a product that will appeal to the top 10% of users and have them fund the mass market as opposed to providing a middle of the road product for everyone.
@tim yes that would be a fascinating chart to see the number of startups focused on advertising as a business model
@antonio of course advertising is important, but it’s not the be all and end all
Has anyone heard of this http://allgoogleadsforfree.com ? If so…is it for real?