The Net Effect

The easiest way to understand how the Web2.0 vision is influencing today’s online development and experience is to look at what characterizes the recent wave of online products used by early adopters, tech enthusiast and influencers (Twitter, Tumblr, FriendFeed, Dig, FeedBurner, LinkedIn). You find a diverse collection of applications and destinations that each work to refine or introduce a single online task or activity. These new companies are fully invested in the idea of the Internet as a central platform which operates a wide variety of integrated software products for online publishing, networking and collaboration. This user driven vision gives users the ability to create a personal network of specialty applications that best manage their lives, interests and relationships-- commonly referred to as the Mashup. The growing stream of new products built to serve Web2.0 users gives the networks of active users a scaling degree of complexity.

Those who passionately embrace this vision are often opposed to companies who operate closed platforms, or seek to own critical elements of the Web 2.0 framework. This movement believes that the web should be characterized by openness, the democratization of information, the empowerment of users, and the free access to software product. It opposes large Internet players seeking stronghold positions in the control of data, social relationships or software. But if user data and relationships are free of corporate ownership, how can can companies that facilitate the network survive? No one is sure.

Web2.0 definitions:

Web 2.0 is the business revolution in the computer industry caused by the move to the internet as platform, and an attempt to understand the rules for success on that new platform. Chief among those rules is this: Build applications that harness network effects to get better the more people use them. (This is what I've elsewhere called "harnessing collective intelligence.")- Tim O'Reilly

The idea of "Web 2.0" can also relate to a transition of some websites from isolated information silos to interlinked computing platforms that function like locally-available software in the perception of the user. Web 2.0 also includes a social element where users generate and distribute content, often with freedom to share and re-use. This can result in a rise in the economic value of the web to businesses, as users can perform more activities online.- Wikipedia

Web 2.0 Compact Definition: Trying Again
What Is Web 2.0
Web 2.0- From Wikipedia, the free encyclopedia>Definitions of Web 2.0 on the Web

A rising Star of Social Media

2008-08-22T04:44:00.000-07:00

That’s right. It’s you.

The most unexpected, important and exciting online development of the last few years is how the web has turned our personal communication and life documentation into inexpensive, compelling, and highly consumable media. Is it me, or is there a bit of a correlation between the reality television of the last 8 years and the personal life publishing and consumption driving a lot of today’s online usage? Are we becoming the creators, producers and promoters of online reality programming for which we also narrate, director and star?

As more and more people place themselves under a self made Internet spotlight, more still have emerged to become dedicated readers and viewers, providing a necessary ally for any type of new media… an audience. While 38.7% of active users are writing blogs, a surprising 72.8% are reading them, with a whopping 67.5% reading the personal blogs of friends and family.

How big is this trend? According to Universal McCann's latest Social Media Tracker there are 475 million active Internet Users worldwide between the ages of 16 and 54. Of those 475 million people, 184 million are blogging. 346 million read some form of blog, while 321 million are reading personal blogs. Personal blogs are the most highly consumed form of blog according to this study. This represents 137 million people who are consuming personal blogs who aren’t blogging themselves.

How this trend will affect the business of media won’t be known for years, though it’s likely to democratize the flow of information, trends, ideas and influence in that more and more of us will be writers, photographers, movie makers, reporters, analysts and opinion leaders in one form or another. Society will be listening to a lot more voices, and that can only be a good thing. Advertisers and the corporate media will likely navigate all this change as gracefully as the recording industry is handling the digital download, or as insightfully as the newspaper industry is handling the fact that news and paper appear to be on the outs. These are interesting times.

I think the ratio between blog creators and blog consumers will level off as new technologies emerge and the sector matures. The blogosphere began as a domain of the extrovert. The fact that the word “blog” still serves as a useful catch-all for all types of web logs, be it to promote business, journalistic pursuits, or as a personal diary, is indeed proof that we are still experiencing the tip of something very large. Of the 300 million people living in the US only 8.7% of us are blogging. Will blogging remain an activity that appeals to certain types of people- perhaps the more self-promotional in our midst? I don’t think so.

Having a blog will more likely become essential to how we document and share life. Consider this; the activities that constitute “blogging” have been with us for generations. What is a personal blog but a collection of stories, recorded self expression, relationships and events as illustrated by our own personal media? Our grandparent’s old trunks filled with letters, pictures, home movies, report cards and family recipes are yesterday’s family blogs in analog. These silos of the past will get pulled into the digital realm someday. Genealogy has hit the web hard over the last few years. When the blogging format meets a Wiki social graph that maps our shared ancestry we will likely see the past documented as quickly and enthusiastically as the present.

The value of the web for creating and cultivating meaningful personal relationships is just half the story. The ability of the web to help us build and maintain meaningful, searchable and fully connected digital memory banks is the other half. Just as today I walk around with every song I’ve ever owned easily found and played with my iPod, tomorrow my daughter will access every important personal moment she’s ever experienced, along with important moments experienced by her friends, family members and ancestors… all on demand.

So getting back to the connection I mentioned between the exhibition and voyeurism of reality TV, and the slight hint of that milieu in the leading edge of today’s online social movement; I believe this is a phase, and a necessary one. A mistake the industry is likely to make is assuming that the needs, trends and activities of today's users, the early adopters and way-early majority, will help us predict the needs and desires of the yet to be engaged true majority. Today’s online social landscape is not yet a mainstream setting. It’s top heavy on tech and youth culture and a little short on delivering relevance and value to people who consider themselves average, everyday hardworking folk. It’s a space where being a geek is a point of pride, and where being edgy, or at least a dude helps get you around. It’s a room with countless corners, built on enthusiastic subcultures, and filled with the truly dynamic. There are also a good number of screamers, wanabe’s and lurkers to keep the authentic smell of openness in the air. It’s addicting, exciting and fun.

But it can also be a bit of a circus; noisy, endless open doors and diversions, with the occasional unpleasant surprise. I occasionally log-off wondering if I have gum under my shoe, or smell of tobacco, cotton candy and popcorn. It’s a space that I enjoy and understand, even when I'm rolling my eyes. But it’s not a place that understands what many older users, parents or young children need from this world.

My parents are convinced that they can successfully ignore the existence of the Internet. Like his grandfather who never learned to read or write, my father is intent on leaving this world never having typed-in a password or read an email. My daughter, on the other hand, has already designed the logo for her future website, savetheworld.org (I don’t have the heart to tell her the domain isn’t available). I’m convinced that the web will play a huge role in both my daughter’s and parent’s futures… even if they resist it. Yet even I broach the subject with hesitation. Where can I bring my parents online where they can enjoy a meaningful social experience? How old will my daughter be before I’m comfortable giving her the keys to the open web? What needs to happen that hasn’t happened for this medium to really reach, touch and serve everybody?

We all have family members and friends who live outside our beloved digital world. What makes the social web so valuable for some and so irrelevant or inappropriate for others? I go back to realty TV. The Internet, as it’s being develop for early adopters and youth, promotes a vibe of open broadcast over closed networks of personal relevance. Web 2.0 is about being open, being found, and being heard. These are not the attributes of intimate personal networking.

We call it social media for a reason. We want our elbows out, and we want them rubbed… especially by people we know, or we have admired, or have little opportunity to connect with offline.

Among the hot apps du jour is Twitter. What is Twitter? Why, it’s your own personal broadcast buddy and handy little lifestream of people you know, or want to know, informing you what they are all doing right now. It’s tres cool. Of course, these are the people who you know that actually use Twitter. That’s about 2 million people worldwide as of last month. What this means is your chances of building a following that is anywhere near reflective of your real life is, well… “hard”. But we face this problem with other apps, and we don’t let it get us down. Twitter, again, is a land where being a geek has great rewards… voila- all my friends!

The unique adoption problem for Twitter is that in order to expand a personal network beyond a list of appealing elbows and fellow geeks you’ll have to somehow convince friends and family members that it’s critical that they start broadcasting when they're hungry, lost their pen, fed the cat, did laundry, or had a bad oyster. What I love about Twitter is it’s ability to document life in a way that is both immediate and far reaching. What I don’t like is Twitter provides little context for all these unique moments flying past. Visiting a friend’s Twitter home is much more rewarding- seeing what they like to tweet about and where they go. Twitter is an important step in helping us realize the value of a documented life.

But part of me wonders if Twitter is more of a social experiment in being hyper-connected than an essential communication tool. What to do with all this new connection and immediacy is really being explored by the people who use Twitter. It’s fascinating. Sleep and food seem to be the top tweet topics, followed by location and work/play reports. It’s 140 characters… so it becomes an art form based in brevity. If you’re a geek you will likely continue to love reporting the play-by-play of personal life, while non-techies will find their small moments too small and their big moments too frenetic… and tweeting will likely pass them by.

Again, Twitter seems like a natural for promoting ourselves so that we can get higher in the reality game-- become known, become more connected, achieve success. I engage in this game myself, and I’m not knocking it. I’m simply stating that these needs are much more narrow than the needs of a Mom who has 3 kids and a full-time career, and would love to network with friends and family, and set up pages for the kids, and plan birthday parties, and manage the family calendar, and publish scrapbooks that are connected to grandparents, cousins, aunts, uncles, and friends… and do it all online without opening a can of spam. But all that inevitable potential is not quite there yet. It’s there… but you have to really want it. The documented life isn’t an easy feat for someone with little time, especially if that someone isn’t a self proclaimed geek like the rest of us.

My point is this; I think the broadcast element is what separates today’s users from tomorrow’s more mainstream Internet. Perhaps we need a new category called “Personal Networking”. Social Networking is about broadcast, it’s about being found and being heard. Personal Networking is different. It’s about being connected. It’s about having a network that reflects the life you really lead. For many, the documented life will wait until a relevant personal network arrives… because at the end of the day it’s the network that will give online life value. Personal media without the right audience has no value. The numbers prove that people already have an enormous appetite for personal media produced by people they know. And today's technologies help consumers capture life quicker, easier and less costly than ever. We await technologies that provide a simpler means of plugging in and managing our relationships and personal moments so that we can all begin to live a more meaningful, connected and documented life.

Sorting out the pieces of today’s Social Media pie.

2008-08-13T13:47:00.000-07:00

What is social media? It’s often hard to really pinpoint because it’s such a moving target. Many defining aspects of social media are evolving. It’s hard to know what this landscape will look like 2, 3 or 5 years from now. How many of the sites that we relied on in 2000 are still around today? Will the social sites and technologies we use today find better rates of success? It’s hard to know. What will social media become? What of today’s social movement will endure?

Instead of talking about social networking in terms of the sites and technologies we use today, it may be more meaningful to define social media by the activities and purposes that drive our involvement. To get our collective heads around the different needs and problems that drive today’s usage, let’s place our social needs into 4 distinct groups: Content, Community, Distribution and Management.

1.) Personal Content:

Defined as: The noise I make. The moments I experience. The content I create.

Enabled by:
Personal Websites
Social, Career & other Community Profiles
Blogs

* Photos
* Video / Audio
* Media Hosting Services

2.) Community:

Defined as: My individual and group connections. The people who make up my world.

Enabled by:
Online Communities
Social Networks (Relationship Managers / Social Graphs)
The Harnessing of Collective Intelligence

* Recommendation Engines
* Social Book-marking
* Reputation Systems
* User Reviews/Opinions
* Social Commerce
* Crowd Sourcing
* Wiki

3.) Data Distribution

Defined as: How I share and receive information. My information pipelines.

Enabled by:
RSS
File Sharing / Peer-to-Peer
Mobile Media

* Podcasts
* Location Based Media
* Location-Based Services

Messaging

* Instant Messaging
* Internet Forums & Message Boards
* Chat Rooms
* Micro Blogging

Search
Lifestreaming
Content Aggregators
Widgets

4.) Relationship & Data Management

Defined as: How I control it all.

Enabled by:
Password, Identity & Authentication Management
OpenID
DataPortability
Timeline, Event & News Management
Relationship Management
Media/Content Management

When you look at these 4 social needs categories and compare them with today's offerings it seems clear that the "management" piece has some growing up to do. As online social management matures it will have a big effect on existing social technologies, new product development and our real social lives.

Many of today’s new social offerings serve very specific social needs. These are more widgets that robust services. Enabling users to build networks of social components is one of the promises of Web 2.0. Will the success of these stand-alone services and the addition of OpenID and Data Portability deliver a more meaningful and reliable experience than a central social networking hub like a MySpace or FaceBook? Or will new central hubs for social relationships and media that better address all 4 needs categories emerge?

How Can We Help Brands Become More Social?

2008-07-16T10:15:00.000-07:00

Every week a new article attempts to redefine what social media means for brand advertisers. This communicates, accurately I think, that the advertising and media industries are still working to understand how they can best help their clients capitalize on the new social media opportunity.

Are brands being approached correctly on this subject. Does the term "advertising" even belong in this conversation? I beginning to wonder if discussing ad campaigns in the context of social networking isn't muddying the waters completely. Can a company succeed with a social presence without assembling the assets to function as a social company? The resources and talent needed to succeed socially have less to do with traditional advertising and marketing, and more to do with customer service and public relations.

Wikipedia defines PR as "the practice of managing the flow of information between an organization and its publics." Customer Service is defined as "the provision of service to customers before, during and after a purchase." These are the brand attributes that make companies social. These activities are grounded in listening to the customer and the market in order to address the needs and concerns of the customer and market. These departments are skilled at deciphering changes in customer perception and market environment, and know the importance of response. They are trained in the art of conversation. Ironically, just as most businesses have given up on idea of Customer Relationship Management (CRM), the ultimate CRM facilitator may well exist in Social Media. CRM, according to Wikipedia, is "a multifaceted process, mediated by a set of information technologies that focuses on creating two-way exchanges with customers so that firms have an intimate knowledge of their needs, wants, and buying patterns. ...CRM is intended to help companies understand, as well as anticipate, the needs of current and potential customers."

Advertising doesn't know how to listen. It only knows how to talk. So talking with advertising people about social communities is like telling an accounting department how you can increase sales. Sure, you can run traditional ad campaigns within social settings, but the real opportunities being advanced are not advertising... but communication opportunities. This misalignment between the goals of marketing decision makers and opportunities being offered is why many companies are moving so slowing, and acting so suspiciously of social media .

Advertising isn't going to go away, and it isn't going to change. Nor should it. Advertising, as we know it, will remain an important way to build brand and drive sales. But developing social strategies and advertising strategies are completely different vocations. I don’t believe marketing or advertising departments are where tomorrow’s corporate social initiative will reside.

In order for companies to succeed socially, they will have to restructure to become social entities. It will happen, but it will take time. Helping companies understand where their social assets lie and how to synthesize these assets to create modern CRM departments maybe the answer. These new departments would strive to manage the ear, face and personality of the business, and help the company engage socially to win. In the real world, when we represent our companies at social events we do so knowing who we are, why we are there, who we are speaking with, and what we'd like to accomplish. We know that our success requires that we engage the room in conversation and that we listen. Welcome to social media.

Web 3.0. What will it be?

2008-07-01T09:55:00.000-07:00

What will characterize Web 3.0? It's a fun thing to think about.

I believe Web 3.0 will be characterized by large-scale applications that mashup multiple Web 2.0 attributes with sophisticated personalization to tackle big problems. These products will be mark by their success at attracting, connecting and serving every type of user. Just as Web 2.0 is about diversity, niche markets and seeking like-minds, Web 3.0 applications will tie us back together through the creation of essential services.

The success of Web 3.0 apps will create global markets for human experience, ideas, opinions and perspectives. Web 3.0 will begin to show us how we are similar and how we are different from the rest of the world. The leading Web 3.0 applications will turn Users into molecules, mapping the role we each play in shaping and defining the single organism that we called humanity. Just as Web 2.0 is about exploring and defining who we are, Web 3.0 will be about exploring and defining the human network.

Web 3.0 will uncover and empower the mass perspective, allowing the ideas that are capable of uniting majorities to rise above the clutter.

An interesting Day for Digital Privacy.

2008-06-18T11:53:00.000-07:00

Professor Daniel Solove, a leading thinking on the importance of consumer privacy, and author of 'I've Got Nothing to Hide and Other Misunderstandings of Privacy,' has a new book out called Understanding Privacy. Chapter 1 is available for free download. It’s worth checking out.

Undertone Networks announced this week that it has joined the Network Advertising Initiative, a self-regulatory privacy association. The interesting thing here is that customer inquiries drove the decision, demonstrating that advertisers care about the privacy policies and practices of the companies they spend with.

BI-ME just reported that some 15 privacy and public interest groups have come together to urge the US Congress to push forward proposals to limit the growing practice of Internet Service Providers (ISPs) targeting ads to subscribers based on their personal web activities.

So what are the guidelines?

The AIB and Online Privacy Alliance have both done a good job of highlighting the important aspects of a sound Internet Privacy Policy.

A basic rule of thumb is that targeting users anonymously based on your database of specified user attributes is ok. The jury is still out on gathering unspecified usage and activity data tied to User IP address. Disclosing how you capture and use data and allowing users to easily opt out are both important. Always keep in mind how costly a negative privacy public relations event can be. Your relationship with your user is likely your most important asset. A comprehensive Privacy Policy can protect your company as much as it does your users.

Here’s a very interesting report that shows how a clearly stated privacy policy and open operational practices can go a long way toward making users more comfortable.

The Free and Open Experiment

2008-06-11T12:41:00.000-07:00

Much Web 2.0 development continues to march in lockstep towards the evangelized vision of an Open and Free Internet. This boundless, free cyber-territory promises to keep us all connected and engaged in a growing number of personal pursuits. The most exciting promise of the free and open movement is the ability to aggregate our online activities, collaborations and content to produce more complete and meaningful personal profiles. Lifestreaming is just one more step towards this promise. Will there come a day when we all live and act as fully, freely, confidently and securely online as we do offline? Will we play a hand in managing and preserving our own digital legacies?

The idea of an open, democratic and ever progressing Internet is exciting. Yet today’s open web can be a complex, time consuming, and intimidating space for many. I’d like to take this opportunity to explore some of the potential hazards lurking beneath the grid.

The most curious aspect of the Free and Open movement is how it attempts to either oppose or ignore some indelible realities that drive a competitive marketplace. The spirit, values and principles of this open vision come from the Open Source software culture, and from an emerging set of business and marketing ideals best expressed by the writings of Chris Anderson. Though these principles work well in the world of collaborative software development and in certain loss leader marketing formulas, the belief that these models will sustain a complex, interconnected and increasingly competitive internet economy seems like a mighty big assumption.

Many of the companies bringing the free and open vision to life will need to find sustainable profit centers to maximize their investments. The online advertising model today still lacks the precision and per-page revenue potential necessary to keep most free web businesses healthy and growing. We as users are already served by many disparate, sometimes competing concerns with unfettered access to our personal activities, data and content. Is Facebook’s Beacon an indication of the kind of revenue driving initiatives that other companies may pursue to turn our usage into dollars? If competing Social Networks, Open Platform Developers, Content Silos and Aggregators enter an economic atmosphere that forces the monetization of assets, will user data, content and activity present itself as low-hanging fruit?

When the most innovative and successful Web2.0 applications are built mainly as acquisition targets, are we cultivating an environment where the Internet’s most valuable assets rise to the hands of a few Industry behemoths like Google, FaceBook and Microsoft? Wouldn't the Free and Open ecosystem be healthier if viable companies remained independent and able to deliver on their long term missions? Does the 5-year exit strategy really encourage a long term mission?

Today’s rapid development also promises to keep us all engaged in an endless stream of newer, better, cooler Internet tools. This innovation is what keeps the Free and Open Web engaging and exciting. But the indirect cost of navigating this constant stream of new products is hardly negligible. It includes:

1) A counter stream of new user agreements, privacy policies, and product marketing.

2) A higher likelihood of accidental data or content loss, steep learning curves, and security breaches.

3) Increasing complexity in managing growing quantities of decentralized content and documented usage.

4) More doorways into personal relationships, content, and recorded activities.

What about the Internet’s much venerated long tail? As life gets easier and cheaper to capture, the amount of personal content each of us produce also increases exponentially. Some have begun wondering if the swelling multitude of user generated content will eventually drag down the value of UGC inventories. When our baby pictures and vacation videos stop drawing attention, and storing them begins to drag down the value of fresher content, will companies purge these personal moments from their inventories? Will the documented experiences of today’s teens still be there when they return to share these moments with their own children? Will our digital lives be seen as our own valuable personal property, or as commoditized “attention economy” inventories to be freely managed and leveraged at the discretion of the many companies that touch them? Will aggregation and filtering from multiple privately owned silos produce satisfying and reliable Lifestreams?

If we continue this rapid pace of growth and this slow pace of understanding user issues and concerns, we'll continue to see many online users achieving an unsatisfying work-to-value ratio in the coming years. The free and open movement could end up subverting the excitement and confidence of many users in the short term if it brings with it unexpected intrusions, inconveniences or other harms.

I’m not trying to play Chicken Little. The Internet industry will answer each of these questions in time. But as the Web 2.0 landscape continues to evolve, mature and consolidate, fatigue, frustration and insecurity will likely play an important role in bring these issues to the forefront. Industry leaders are already working to define Data Portability, and OpenID standards. The bigger issue of data and content ownership seems likely to remain unsettled and contentious for some time to come.

Make no mistake, the sheer power and potential of the medium will continue to breed inevitable challenges and uncertainties. Even with much yet to be fleshed out, the Free and Open Web is and will remain an exciting and attractive value proposition for many users. Still, others will choose to take their personal lives, cherished moments and close relationships off the wider social graphs and seek quieter and more intimate settings. Sites like ASmallWorld and TeeBeeDee are proof of the growing demand for more focused and personal environments and experiences. It’s also inevitable that many more will pay to place their lives outside that attention economy. I think the driving factor is how users choose to live. Some like the mass reach and openness of Web 2.0. Others prefer to keep their real lives between friends and family.

One thing is certain…. innovation and options will abound for everyone...

See also: There’s No Such Thing As Free! by Max Kalehoff, Choking on the Long Tail by Tom Foremski, Choices, Connections, Commitments by Pete Blackshaw, The ClickZ Network, Jul 10, 200, Visualizing Social Fatigue by Josh Catone and Welcome to the social mess? by Caroline McCarthy May 12, 2008

Web Advertising: Building an Ad Driven Business

2008-05-20T08:37:00.000-07:00

Building Holistic Communities for the Attention Economy

Online Companies that depend on advertising revenue will always be valued on their ability to turn their usage and page-views into dollars. This makes creating and selling effective advertising opportunities as important as winning users.

Many online startups are bypassing advertising or other business models altogether to focus their resources on scaling communities of users around their technologies. The belief is that these companies will be able to realize significant revenue potential once they have reached critical mass. Many of these founders are more likely hoping to become acquisition targets before they have to implement money making strategies.

Pursuing an ad driven business model isn’t a sure path to profitability. Even big online successes struggle with how to attract and grow ad revenue. The release of Facebook’s Beacon and the aftermath provides many lessons. Before Beacon many big brands were beginning to explore their FaceBook strategies. Since Beacon most are working on social strategies outside the popular social networks.

How viable is the online advertising business model for most companies? Is it risky? Should you spend time and resources pursuing ad dollars when you could more easily focus on driving usage and locating other streams of revenue?

For most sites, I believe online advertising is both viable and important. Here’s why. Advertisers do more than pay for linked real estate. By associating themselves with your brand they substantiate the value you’re creating, and the value of the users you’re attracting. Advertising can also gives your users access to a wider variety of relevant products, services and resources. Building a healthy community of advertisers, business partnerships and affiliates can make your company more valuable and attractive to both your users and potential buyers.

Online destinations that build spaces around specific user missions, affinities or activities are more successful selling ads and keeping rates high. I call these holistic communities. These are websites or channels where the operators, users and 3^rd party marketers all share aligned missions or purpose, creating an ecosystem of interdependent participants. You could also simply call this synergy.

To qualify your advertising potential, first take a close look at the audience you’ll be building, and what they’ll share. What ties your community together? Can you locate a well rounded universe of advertising and business development prospects that can help your users and communities succeed? Those are the relationships you should pursue.

The key is giving users relevancy. Google is the most profitable online advertising company because they deliver relevancy both on their site and across the web. Google developed a slightly better method for ranking websites at a time when Alta Vista, the former leader, watered down its search mission to compete with full service portals like Yahoo. By enhancing search relevancy, Google won the search market. In 2003 Google introduced AdSense, a tool that serves cost-per-click ads by analyzing and targeting page content on publisher sites. AdSense gives web site owners an easy way to have contextually relevant ads appear on any page, monetizing web pages without selling ads. AdSense enabled Google to spread its existing cost-per-click business across the open web.

Google demonstrates that the key to advertising success is relevance. So as an ad driven business your mission becomes centered on helping your users find relevant ads. How can you accomplish this? There are 2 basic methods. One is by targeting user consumption, and the second is by targeting user profiles.

Google’s business targets consumption. A user searches for a specific word or term demonstrating a desire to consume a highly defined product or content. Google serves advertising and web sites aligned with the consumer’s immediate interest. Google’s AdSense looks at the content being consumed and serves ads that are topically aligned with that content. Both of these methods bring users relevant options that they wouldn’t have had access to otherwise, which is why Google’s click rates are so high and their products are so profitable.

In order to provide users with relevancy based on content consumption, your site must be easy to navigate based on need. Clear and thoughtful menus, channels, grouped content, keyword search tools and other drill down methods will all allow you to create user value and carve out effective advertising opportunities. Yahoo’s Auto, Finance, Real Estate, and Jobs channels each work to build user and advertiser communities around specific needs. The focus of these environments commands much higher ad rates by allowing timely introduction and fueling competition for premium placement. Unfocused pages on the Internet generate .25-.35 cents for every thousand pages viewed. Holistic communities can often achieve effective CPMs (Cost-per-thousand) of $10-$20. AdSense generates effective CPMs of $1.00- $15.

Whereas consumption targeting is time-based (I have this consumption need at this moment), other methods for targeting are user-based. By identifying and publishing your demographic, psychographic and behavioral data in your media kit, you are building the basic targeting tools that media planners will use to consider whether your audience is right for their message.

There are other technology-driven targeting methods that utilize user cookies and/or personal registration data. These methods allow companies to serve relevant ads that are not contextually tied to current consumption. If your company assigns user-cookies that track which users spend time on your food and recipe pages and search on food and recipe related words- you can use that data to serve those users food and recipe related ads even when they are involved in activities that have nothing to do with food. This type of data allows you to create more opportunities to reach specific user segments. If you have an online registration process that records user demographic information like age, gender, industry, interests, income or other personal attributes, you can leverage this data to help advertisers filter out the users who are not in their target market. These capabilities command much higher ad rates because they allow advertisers to concentrate their impressions to ideal users, which eliminates waste.

Both of these methods utilized stored user PII (Personal Identifiable Information).

According to Peter Fleischer, Google's Global Privacy Counsel, “The key privacy principles which govern the collection and use of PII are “notice” and “choice”. Any ad targeting based on PII needs to be transparent to end-users and to respect their privacy preferences.”

In other words your privacy policy should clearly state how you collect and use PII, and you should give users the means to opt-out of any PII targeting systems you utilize. When properly managed, most users will understand that you’re using their data responsibly to bring them relevancy, and will feel that their privacy and security is in good hands. When best practices are ignored you risk the kind of public relations problem that FaceBook experienced with Beacon. Using your PII data to develop ad inventory that you can sell as targeting or filters ensures that you’ll keep your users and their personal activities private and safe.

Why is relevancy so important to building a successful advertising business? It helps to understand the economy that drives much of the free and open Internet.

"Attention economics" today is primarily concerned with the problem of getting consumers to consume advertising. Traditional media advertisers utilize a linear model that consumers go through - Attention, Interest, Desire and Action. Attention is therefore crucial. -WikiPedia

What is an Attention Economy? When you begin selling online ads you’ll hear prospective advertisers often say “I don’t look at banner ads, so I don’t think other people do either.” How many of us would say that we actually pay attention to Internet advertising? When we talk about online ads we’re talking about the loud, alluring or otherwise distracting advertisements that we find completely irrelevant to us. We become conscious of having to withdraw our attention in order to stay on mission. If we didn’t do so, we couldn’t focus. When users see an ad that is of high interest, the thought that they are being served an ad often goes away completely. Targeted messages often feel more like points of interest than sales pitches.

Consider user attention the new online currency. When your users give their attention, repaying that attention with relevance will earn you more and more of their attention. This creates an environment where your users and the advertisers who are capable of serving them can come together. The more relevant advertisers each user sees, the more attention they are willing to spend. This is how business, and a lot of it, can get done in online. Just look at Google’s bottom line.

So how do you begin? You begin by understanding that you have to start somewhere, and you’re better off starting with business development relationships and affiliates that will help set the foundation and the tone for your communities or channels. Better to make less money will smaller advertisers who you think can succeed with your audience than to accept large untargeted campaigns that treat your users like eyeballs. You’re goal is to build slowly and to keep your ads and business partners aligned. When those eyeball marketers with big budgets come calling, always consider whether their participation on your site will help you build an economy of attention or distraction. When your environment leans towards distraction, every participant of your community and economy will likely pay a price.

The following describers are helpful in assessing the health of a sites attention economy. As you visit your favorite sites ask yourself if you think their economy is based more on attention or distraction. How do these characteristics effect your relationship with the site? What’s your sites economy based on?

Attention Economy

Focused
Relevant
Personal
Engaging
Safe
Interesting
Purpose
Options
Value
Community

Distraction Economy

Unfocused
Random
Isolating
Noisy
Suspect
Predatory
Distracting
Diverting
Fatigue
Wilderness

If you can succeed in keeping your attention economy healthy, and in building holistic environments that are sustainable, reaching a critical mass of marketers and users should provide the following Network Effect:

Advertiser response rates, conversion rates and renewal rates that are well above industry averages.
Users that visit more often and stay longer.
An advertising market place where competition for your best inventory justifies healthy rate increases.

These are the attributes that keep effective CPMs and total ad revenue potential on the rise, leading to a healthy and profitable Ad Driven business.