A New Corner in the Future of Advertising

Google introduced their ad widget the other day. 

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The cool idea is that ads can now be packaged as little widgets that you can drag and drop onto your blog or website, as easy as it is to embed a YouTube video. This ease of placing ads has rekindled speculation about a new form of advertising that ought to be. John Battelle calls it sell side advertising. I prefer the term "choice ads" because publishers (that's YOU these days, remember?) chose which ads they want. 

The simple idea is that you can craft a publication, or a reading/viewing experience, primarily by choosing and sequencing ads. Selecting the right cool ads -- not merely cool content -- is the attraction. Not just tiny adsense text ad boxes, but full page ads, or even commercials inside widgets. When I was part of the team making Wired magazine a decade ago, half the battle at launch was landing the right cool ads. We had to convince the advertisers to join (and pay) us. But what if we could just choose the cool ads we wanted, without having to ask permission? What if we could simply harvest the the best ads (measured by any metric we choose) and were paid for the ones we ran according to the traffic we brought to them? 

This may be where we are headed. 

The missing piece is the technology to track the visits and attention a nomadic ad gets and then to exchange this data securely in order to make a correct payment to the site. This is a job for a Google or Yahoo. But once that system is up and running, as an ad zips around the web and is caught and then embedded in various sites, if a reader clicks on it, then the owner of the site -- wherever it is, as long as it is part of the network -- will get his/her pennies from the advertiser.   

If we were doing a new cool Wired-like magazine now (online of course), we would spend as much time hunting down unknown, little-seen, attention-focusing, appropriate ads. But there is always the question of profitability. In this new era, wildly popular ads may not pay as much as say niche ads, or perhaps not as much as more effective ads that weren't so humorous or provocative. For the new kind of publisher building on cool ads there will be a trade off between cool looking ads that make no money, vs. less cool profitable ones. There might be magazines/publications/online websites that contained nothing but artfully arranged ads - that would make money. I  think we could bet on that. 

This new regime puts the advertisers in a unique position, too, because they might not release all their ads in this form. Some ads they might save for direct placement (making them rare) while others ads they send out cheaply and virally into the blogosphere. It is almost like the advertisers are getting PAID to advertise -- paid in attention. I think we could count on various flavors of ads. Some are designed to replicate quickly, and to induce action (purchases) by the viewers. Others may be designed to sit monumentally where they are told to stay, not travel, and slowly affect branding. 

It would also breed some new styles of advertising. Advertising creators could no longer assume they control where an ad will show up. This uncertainty would need to be compensated in some way by the ads design. Since an ad could, in theory, be used like editorial, it might resemble editorial even more. For sites that were only or mostly only ads, the ads might resemble infomercials -- only better. 

The success of this system would not remove the desire of advertisers to have placements they control, so I think the traditional relationship between publishers and advertisers would continue as well. Maybe even in the same publication. An advertiser may make a deal to have exclusive placements in some part of a product, while leaving the rest of the space to pull-placement (the publishers pull the ads they want).  Nor does it eliminate the need for an ad network. There will be plenty of ads no one wants to pull, but are willing to run at higher rates in the right location. I may never choose to run a cheesy mortgage ad on my front page, but I may not mind sticking it on an archive page where I'm talking about home finance. If I have control over where and when I run the ad, I am much more open to using it. 

Future Ad Matrix-2

We can imagine these new "choice ads" as expanding the possibility space of ad placement. Let's draw Ad Selection as a canonical 4x matrix. The vertical axis is Advertiser selection; the horizontal axis is Publisher selection. In the lower left, where the axis converge, both Advertiser and Publisher choose the ad for placement. This is the traditional publisher/broadcaster model. One quadrant right from that in the lower right, the Publisher has no selection, but the Advertiser selects. This is the Adsense model. In the upper left, the Advertiser has no choice, but the Publisher selects; this is the new "choice" seller side model. 

The last quadrant, upper right at first looks to be a null white space-- neither Advertiser nor Publisher select -- but I think it is also promising. Here there might be publishing vehicles where both the editorial content and the advertising content are generated by contextual search and inquiry. AdWords gives a glimmer of this. Cross it with auto-generated Google and Yahoo News to get another glimmer. I'm imaging services like AP, Reuters and other news wires that generate content served to publishers out of their control.  It may be possible that linking this search-linked generated content up context-linked ads (or vice versa!) could be desirable for both readers and advertisers. Think of the upper right quadrant this way. You found some really cool ads you want to run and you'd like to find some content to go with them. So you have the ad network (Google?) find the available content to match the ads (with corresponding micro-payment made) and you now have a editorial/ad match that was generated by the search network. I think it could fly in the future. 

I was chatting about all this the other day with Josh Quittner, the recent editor-in-chief of the former Business 2.0 magazine. If we are going to have a system for "choice ads" he suggested, why not let users create the ads?
 
  Tahoe 

Yes, we've already done that with Chevy Tahoe and had mixed results, but what he had in mind is the next step. You let anyone make an ad and put it into the choice ad network. Then let user-publishers choose which ads they want to place on their site. Those user-generated ads that actually produce clicks will be kept and/or shared. Those that aren't effective are dropped. Users become ad agencies, just as they have become everything else. Use market forces to create and host the best ads. The choice ad system can also use math-intensive bidding algorithms to optimize the tradeoffs between niche products and popular fun. Just as there are amateurs making their living shooting micro-payment stock photos, or working tiny spreads on auctions on eBay, there will surely be many folks who will earn a living churning out endless variations of ads for mortgages. 

I mean really, who would you rather made your ads? Would you rather employ the expensive studio who come up with a single campaign using their best guess, or a thousand creative kids endlessly tweaking and testing their ads of your product? As always it will be a dilemma for the crowd: should they work on an ad for a reliable bestseller -- and try to better a thousand others with the same idea -- or go for the long tail where you might have an unknown product all to yourself if you get it right?  Fans of products would love to create ads for it. Naturally they believe no one else knows it as well as they do, and that the current ads (if any) suck, so they will be confident and willing to do a better job. Check out the Graffiti app for Facebook. A fair number of the hand-drawn graffittis are commercial logos and products.

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How realistic is it to expect big companies to let go of their advertising? Not very. Big companies are not going to be the first to do this. It will take many years of brash upstarts with small to no advertising budgets who have little to loose figuring this out. Even then, the big brand advertisers will enter the water only with one big toe. But as in Adsense, big is not where the leverage is. Rather this new corner of ad space liberates the small to middle -- a billion businesses who would have never thought of, let alone ever got around to, developing a cool advertising campaign. With a choice-ad system, these ads are created by passionate (and greedy) users and unleashed virally into the blog wilds, where the best ads are evolved by testing and redesign until they are effective.


 
 

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