How Advertising on the Web Should Be

Posted on April 7th, 2009 in Advertising, Talk | Comments Off

The effects of digitization have forced almost every information industry to innovate from the newspaper industry to the music industry.  It is almost shocking that the one industry that has long supporting most web services, the advertising industry, hasn’t figured out an efficient and successful model for the Web.

Currently advertising on the web is ineffective and intrusive. The web is an interactive medium by nature, a two way street, a conversation with users, something previous mediums have never been able to accomplish.  The Web 2.0 movement got users thinking of the web in different ways, as a tool to connect and share with others.

Advertising on the web cannot mirror previous advertising methods because the web is capable of so much more than the limited traditional media outlets.  The broadcast nature of television constrains users to watching ads as they interrupt programs; web users have more control over the content they choose to view and the ways in which they interact with websites.  Everywhere except the web, advertisements are tailored to the formats by which they are displayed, for example text/image ads in print and video ads on television.  Web advertising should be interactive and leverage the social and interactive capabilities of the web.

Ad blindness is on the rise, I’m sure you probably don’t even notice the ads on Facebook anymore and if you’re like me, I’m sure you get frustrated by the Flash ads the takeover your entire screen and hide their close button.  My theory is that advertising cannot take place on the web the same way it does in traditional media.  I am forced into viewing ads on television and in print but the web doesn’t work the same way.  Maybe it’s something about how easy it is to purchase things online that tempts advertisers to pester us to buy things at every blog and website we visit, but I am rarely in the mood to buy things at the times they approach me (regardless of how targeted they are), wasting their ad dollars and my screen space.

Today’s online ads are set up the way candy is set up at a grocery store, at the checkout line, as an impulse buy.  Advertisers place their ads around content and expect me to behave like the impulse buyer and click on their ad and buy their product.  This is not how people buy things on the Internet.  When people shop online, they go online with the intent of buying things; they are focused, in tune to their “shopping mode.”  If I am reading a news story before I leave for class, I do not have the time or interest in buying something at the moment, regardless of how relevant the product is to the article.

Instead of trying to sell me your product at every waking moment, take this time to engage me as a person.  Introduce me to your company, “sell” me your company: it’s values, ideals, etc.  Web 2.0 had users connecting and sharing, sharing information about themselves and information with others.  Use this as a branding opportunity. Many products, however relevant to my interests, don’t necessarily translate into products I would actually buy.  If you have to display an ad at random, don’t target your products to me unless I am in “online shopper mode,” tell me about your company.  Use my information to target companies to me that share my values and beliefs.

I don’t care if you are a company that sells a product I would never purchase, use this medium to get me on your side, make me a fan of your company.  For example, I don’t have a pet so I don’t have to buy pet food.  If a relevant sponsor to an article I am reading about dogs is a company like Purina, they should still take the opportunity to make me a fan of their company.  This way if I have a dog in the future or a friend asks me to pick up dog food (without specifying a brand) for his pet on my way home, I’ll think to buy Purina because they engaged me.

Some quick exceptions: I think today’s type of web ads would work if sites could tell when I was online for the purpose of shopping and only displayed them at those times.  I also think the TV model of advertising works well on services like Hulu, most people don’t mind sitting through periodic, 30 second advertisements in exchange for full episodes/movies at high quality (most people are also used to this format for broadcast and video anyway).

The bottom line for this model of advertising would not be in immediate sales, but in attention.  This model would open a dialog about a company between friends and kick start a guerilla marketing campaign with even less effort.  It would generate buzz and interest in circles of people who can actually get the word out to potential buyers.

For the same reasons that a company like Twitter is so successful, even without a revenue stream, this strategy has a strong potential for success.  This is simply a different model that values relationships instead of click through rates.  Tying back to the point I alluded to at the end of my last article, now more than ever on the web it seems attention is more valuable than cash.

Economies of The Information Age

Posted on March 29th, 2009 in Economy, Talk | Comments Off

I apologize for my absence since my first two posts, I’ve been extremely busy and I plan to get back on schedule and blog frequently as I originally planned.

This week I’m discussing how markets are shifting and changing as we enter the digital era.

In his book The Wealth of Networks, Yochai Benkler discusses the fundamental shift we are currently undergoing from the Industrial Age to the Information Age.  One aspect of this is represented by the shift from a market-based economy to a market and non-market based economy.  This emergence and growth of the non-market based economy is extremely interesting and is something I will focus on.

Information is one of America’s largest exports, we are no longer the manufacturing country we once were.  As everything becomes more information oriented and as digital technologies take over their traditional tangible counterparts (think digital audio files from audio CDs), we see this rise of the information age.  Think about the weight of a dollar, what used to buy a vinyl record was soon replaced by the smaller, lighter compact discs; the compact discs now largely replaced by digital audio tracks.  These digital files, information files, weigh virtually nothing, they are intangible items.

If you think about the last 50 to 100 years, most people would never work for free; people expected compensation for their work.  It would be unlikely to find someone willing to work or work overtime without expecting some sort of compensation, primarily financial compensation.  In today’s economy, we find that while this is still/mostly the case, there are many examples of a thriving non-market based economy.  People who work without compensation because they are passionate about a project or a cause.  Many people now have the tools to be able to work on these projects inexpensively, think about the software developer who gets paid for programming at his day-job, then contributes his knowledge and skills to an open-source project later that night.  This application of knowledge is simply something that has never been as feasible or practical before.  For example developing a web service requires only a computer, internet access (which is widely available), and the programming skills, while building a car requires expensive materials, space, and the mechanical knowledge; thereby making it nearly impossible for a factory worker or mechanic to construct their own automobile at home.

Some Examples:

Look at the Linux projects, they are open sourced and contribution based.  Contributors are working, the contributions they make on the project are largely consistent with the type of work they do at their day jobs.  This “overtime” contribution/work is done out of their passion for the project.

Look at Wikipedia.  Wikipedia’s success is based on the contributions of a globe of Web users and Wikipedia moderators. This idea of a universal, free, always up-to-date (and constantly updating), accurate encyclopedia, with the largest collection of articles was unimaginable 10 years ago; and to think the contributors responsible for creating and maintaining the database continue to spend their time and effort without getting paid.

Many companies are starting to take advantage and leverage this idea of crowdsourcing.  While certainly not the first, or only company to achieve this, by far the most popular is Facebook.  Facebook attracts users because they want to update their profiles and information for their friends to see and they want to see what their friends have updated and added.  Facebook therefore relies on its users for the content of the site, the content that brings users back.  Facebook simply redesigns their page occationally and sells advertising.  The users are seemingly working for the profitable company, being responsible for the return visits and pageviews, for free.

I believe we will begin to see more activity in this non-market space and more companies aligning their strategies with this model in the future.  There are companies whose business models don’t seem to make much sense at the moment, companies we don’t fully understand, like Twitter.  It’s interesting to see a company with little to no revenue stream is generating so much buzz and continues to raise venture capital.  This leads me to believe in an idea I will discuss more in a future article, that getting paid with attention is becoming more important and more of a motivating factor than getting paid monetarily (at least on the web anyway).

I would love to continue a discussion on this, please comment below.

A Better Introduction

Posted on January 28th, 2009 in Talk | Comments Off

As a better introduction of what to expect from my blog, I invite you to understand the challenges I plan to tackle and the types of issues that interest me.

I find it interesting to think about future opportunities for the emerging technologies that are increasingly becoming more exciting and game-changing. Discovering the practical applications of these technologies and consequences surrounding them, and even further, trying to develop a business strategy around them remains a challenge.

As recognized by Marcene Sonneborn, one of my professors at Syracuse University, there are a few important notes to keep in mind when thinking about the future and environmental scanning:

  • “Any useful statement about the futures should appear to be ridiculous.” – Jim Dator
  • “Not all change is created equal”
  • “Never say never”

By this I mean, no one anticipated the market Xerox created or the importance and demand for copy machines; all innovation has positive and negative implications (look no further than file-sharing services); and never constrain your thoughts by what you believe to be implausible.

Consider current technologies and their possible future applications.  For instance, the possibility of embedding nanotechnology in the body to allow for humans to download medicine to heal themselves.  Or think about the future of genetic sciences: since each cell contains the blueprints for the entire structure of an organism, it would be possible to extract a cell and grow out certain pieces.  For example growing human organs in animals for transplants, or possibly even a plant that can grow meat (this would change a lot for the vegetarian community).

It is also difficult to apply these ideas to future business models, especially as we shift from the industrial age to the information age (a topic I will further discuss later on).  The way we do business in the future is likely to change substantially as we shift from market-based production to a society of both market and non-market based production (read:open-source movement and crowdsourced collaboration), where the value of information is increasing and the methods of protecting intellectual property and copyright is inevitably going to change.

I encourage you to comment as I hope to inspire thought, spark discussions, and further develop ideas that are risen in my posts.

Welcome

Posted on January 20th, 2009 in Talk | Comments Off

Hello and welcome to my new blog where I plan to discuss interesting and relevant topics regarding business and emerging technologies.

My name is Dave Schatz, I am an undergraduate at Syracuse University and an entrepreneur.  I have pursued a number of ventures ranging from a taxi company to a web design firm.  I have a strong background in programming and project management and I’m an avid reader of blogs like TechCrunch, Engadget, and Gizmodo.

I am excited to see where this leads and I hope you are too.