Greed Generation

by Josh Lovison, Thursday, February 1, 2007

PEOPLE ARE greedy. Oh sure, sometimes we break from the mold and have our altruistic moments, but at the core of our being, we love to receive. This shouldn't come as a shock to anyone reading this -- many advertising models are built on this premise: by submitting themselves to advertising, consumers can get things for free.

However, there's been an oft-repeated phrase going on in advertising and marketing these days: "Give the consumers control." But I think that's obfuscating the reality: regardless of what you as an advertiser or marketer choose to do, consumers are taking control. And in the spirit of greed, you can expect Web 3.0 to be adding an additional twist.

Revenue sharing. Learn those two words well. With the boom of user-generated content, most users were just happy to get a voice. However, the industry of UGC is maturing, and enough competition between venues has arisen that a new factor has been thrown into the mix: revenue-split models. Right now we're seeing it primarily with video hosting sites. First there was Revver, with a 50% advertising split for post-roll ads. Brightcove is just starting to roll out the same model, with possibilities for expanded ad space. Panjea is a social network trying to implement revenue sharing. A number of bloggers take things into their own hands and put Google AdSense onto their blogs. I've also seen some forums tie their users' AdSense accounts into the system to share revenue, depending on who created the post. And just this week, we had the big news that online video industry leader YouTube is jumping on the revenue-sharing train as well.

In the past things haven't really taken off with revenue sharing because it's new, and until recently, most services trying it offered little in terms of service. Which is a nice way of saying they weren't very good. However, I return to the original tenet of this article: people are greedy, and even if it's only $20 a month, between two nearly equal services, people will choose the one offering the kickback.

And we should love them for it. There are three things revenue sharing could do for the media and advertising industry if we'd just let it:

1. Reverse bidding. The problem with current revenue-sharing models is that there's not enough targeted ad inventory for sites that appeal to multiple demographics. What inventory exists tends to focus on a single demographic, which decreases both the site and content producer's revenue when the content appeals outside that demographic due to decreased ad relevancy. But most content creators, no mater how amateur, know what their audience likes, both in terms of content and advertising. I'd love to see a content site allow users to select which ads of their hosting platform's inventory to include in content. Users could choose these based on the product's or the ad creative's appeal to their audience. For performance based marketing, this helps both the publisher/content creator and the advertiser by increasing relevancy. And as an added bonus for advertisers (and the reason I used the term "bidding"), the more your ad would be requested, the lower your CPC rates (because your ad would be bringing value to the site by performing well). This model doesn't yet exist, but it should.

2. Mainstream acceptance of behavioral targeting. Right now most consumers curl up their faces when discussing BT, as if you'd been offering them last week's casserole leftovers. "Companies tracking my data? No thanks!" And admittedly, it does sound a bit Orwellian. However, most of this displeasure is at the concept, not at the reality of the implementation. If incorporating BT into the ad selection for their own content was an option, users could see how allowing BT increases click-through on ads served for their content. And users aren't stupid, just uninformed. They will realize that higher click-through is resulting from increased relevancy. And in approving the option, the system should teach them how it works (anonymous cookies). Increasing their understanding of the process will increase their acceptance for the use of cookies in their own surfing.

3. Reframing of advertising in general. Involving users in the process of advertising, while on a rudimentary scale, will refocus and rebrand ads to those users. Today, if you are a marketer and you truly believe online ads are welcomed by Web surfers, you have a serious case of denial. Users don't like ads in the majority of cases (sometimes great creative wins them over, but that's less often.). Users see online ads as interruptive and cluttering-and, in most cases, don't notice them at all due to overexposure. Personally, I think I've only clicked on a handful of display ads in the past 10 years. The one exception was when I signed up to revenue sharing platforms. Ads were no longer clutter, they were what was putting money in my pocket, and more important, in the pockets of fellow content posters. If I enjoyed a video from a revenue-sharing site, I'd watch the post-roll ad out of respect for my fellow content creator. Ads went from a negative concept to, well, a less negative concept.

Revenue sharing will expand around the Web. All the dominos are lined up for this change and some are starting to fall. Because like it or not, consumers are taking control. And if you can't beat them, you can at least let them join you -- and don't worry, they will. Because they're greedy.