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An inside look at how content payment models and systems are evolving in an era of rapidly changing markets and publishing requirements.
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ContentBloggerTM - Content eCommerce |
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| Thursday, March 18, 2004 |
Advertising Isn't Always Intrusive; It Can Be Useful and Entertaining
So, why is the new version Norton Personal Firewall set up with a default that blocks all ads, not just pop-ups, but also prevents Google's AdWords PPC search listing ads and other banner-type text ads from being clicked-through? Google's AdSense ads, Yahoo!/Overture's paid listings, and featured sites on MSN are similarly affected. As reported in ISEDB.com and MarketingWonk, Norton is erring on the side of blocking anything that might be a display ad, including some site logos or header images, and it is up to users of its software to reset the default condition to allow ads to be viewed and clicked.
Perhaps some extremists want to block out all advertising on principle, even if the end-result is a steep decline in the amount of quality content available, once ad subsidies disappear. But, considering that the Web offers an environment where advertising can be more relevant and informational than in other media, blocking all ads is an extreme measure that "throws out the baby with the bath-water".
Still, just because advertising can be superior on the Web, doesn't mean that all intrusive ads will be replaced by ads that are relevant, personalized, and entertaining. We have a long way to go before technology can approach guaranteeing perfect matching of ads with interested viewers on the Web. But, Norton's actions illlustrate that the online advertising industry, and search engine marketing in particular, needs to be mindful of its reputation. The recent flap over Yahoo!'s content acquisition program (CAP) is a perfect example. Although CAP has the potential to significantly increase the sources of quality content that Yahoo! users can find listed in their search results, it's reception was plagued by "market overreaction" from both Web site owners and users concerned about unbiased results listings. [See John Battelle's Searchblog for a good overview.]
As I said in my contextual ad research paper: "the line between advertising and valuable content is becoming more and more blurry, and contextual advertising will help accelerate this trend. Rich media, personalized messages, interactivity, and creative delivery of relevant content are some of the key tactics enabled by new technology that are being used to transform static advertising promotions into meaningful or, in some cases, entertaining content." Furthermore: "There is no reason that the applications for matching content should be limited to placing ads on Web pages. The same technology could be used to improve popular "more like this article" links that are most commonly used to help guide users to additional articles on a specific Web site, so that the related information could be presented in a sidebar on the Web page, and the user wouldn't have to click through to preview the related articles. Plus, the range of related information could be expanded to include information from affiliate partners, or even from partners identified by a third-party "content-server" firm."
So, if contextual advertising is so helpful, then why is Norton blocking all ads? Maybe because the quality of advertising, just like editorial content, ranges across a broad spectrum, and they are focused on the "offensive" end of the spectrum. As a solution, maybe the words used to describe "contextual content matching" need to be changed to exclude the words "ad" or "advertising", since ads are so closely associated with intrusive promotions for unwanted products or services, like pop-up ads. Better yet, in the longer term, search engines and Web sites that accept advertising, as well as the companies that are buying and producing advertising, need to be careful to establish a reputation of providing value to their customers first and foremost, then the monetization model will move to the background of users' minds, provided that intrusive, annoying, and distracting ads are kept to a minimum--and preferably kept off any site that I visit!
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posted by Janice at
1:19 PM |
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| Wednesday, March 10, 2004 |
Setting Subscription Prices: Agency Problems Occur When Distributor/Aggregators Set Price
Today's headlines about CBS' withdrawing their content from EchoStar/DISH satellite network and Viacom's interest in purchasing a cable system illustrate the problem that keeps cropping up when the distributors of digital content, rather than the content creators, set prices for large bundles of content which are packaged with the distribution cost. Cable TV and satellite TV distributors are a prime example. The company that provides the technology for distributing TV programs is negotiating prices and royalty payments with the content providers (program creators) and setting the price of basic bundles that consumers may purchase. With fixed-price subscriptions, producers of quality content get crowded out by lower-quality (and lower-cost) programming as the number of channels in the bundle increases. Outside of media industries, distributors rarely set price, they just act as a sales agent or delivery service (think trucking companies).
The same issue occurs when aggregators of digital content on the Web (or other online systems) bundle in their costs of technology (search, interface, data integration) with a fixed-price bundle of premium content. The problem is magnified when, to meet competitive pressures, the distributor/technology developer continues to add content of marginal value to the bundle in an attempt to claim "more channels" or "more variety". As a result, each content provider receives a smaller percentage of a fixed-size (or marginally-increased) pie. Essentially, the distributor is not acting in the best interest of each content provider, which economists term the "agency problem".
As Anne Mulcahy, Chairman and CEO of Xerox, said in her address to the AIIM/On Demand conference this week, "The 'I' in I.T. is getting bigger, and the 'T' is getting smaller." Although her focus was on Xerox document management services, the concept applies equally to the for-fee digital content market. The Internet has made the technology for distributing content cost-effective and ubiquitous. Consumers still value the functionality that technology adds to digital content. However, the focus has shifted toward the content and how the content can be put to work to increase productivity in business analysis and other knowledge-based functions, and away from simply laying the pipes that will deliver the content. In this environment, is there still a viable business for content aggregators? Yes, but they need to focus on value that's directly related to enhancing content by adding context, creating a new community of users, or integrating the content with the users' business applications. Providing a search engine and user interface won't be sufficient to convince content creators to entrust the pricing of their goods to a technology provider/distributor.
So, should Sumner Redstone of Viacom buy a cable outlet? It's not clear that owning the distribution channel is necessary. However, it does look to this analyst as though there is change brewing in the relative power positions of content creators and distributors--especially with respect to pricing of content.
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posted by Janice at
11:57 AM |
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