Jeremiah Owyang of Forrester wrote about a really interesting chart in Avenue A/Razorfish’s 2008 Digital Outlook Report in his blog today (by the way, if you touch the social media industry in any way you should be a regular reader). Avenue A/Razorfish lays out their billings by vertical from 2004-2007 in the chart below. The steepest curve from 2006 - 2007 is Community followed by Entertainment. As Jeremiah notes, ““Community” shot up 34 million to 55 million an increase of 61%. If you look at that trajectory it was the fastest growing billing for their firm in the last 4 years.”
What’s most interesting about this is that we’re only just beginning to see the value of social media from a marketing perspective and the industry is just starting to crack the nut of concepts like targeting. It’s probably safe to say that this curve is going to continue heading up in that direction through this year and over the next few as business models mature.
David Deal (marketing director at Avenue A/Razorfish) raises another interesting point in his blog. David talks about his colleague Brandon Geary’s research detailed on pages 49-55 of the report, “Conversations with the Connected Class.” Geary’s team conducted “in-depth interviews with 25 people between the ages of 18 and 34 who exhibit a high propensity for using a variety of digital platforms.” David writes that, “The connected class also views different social media sites as opportunities to meet new people among multiple cultures and scenes…We believe the industry will see the proliferation of even more specialized, sophisticated social networks that cater to the varied identities and roles of the connected class. Consequently, marketers need to plan on participating in even more social media networks and customize our approaches for each speciality.”
We couldn’t agree more. At its core, KickApps is all about enabling publishers to create venues for people to express themselves, meet like minded people and discover new content of interest. If you step back and think about it, social media is all about enabling those age old HUMAN behaviors. The internet and technology, from message boards to social networks to UGC sites, has merely replaced (or supplemented) the neighborhood park, pub, post office, corner store, etc. To argue that one site or one social network is all that people will ever need is about as naive as saying that people will only ever need to read one newspaper, shop at one store, and eat porridge everyday.
For our part, we’ve simply created a way for people/publishers to be able to very easily create and run their own social media sites that facilitate these behaviors. We naturally believe that our focus on innovation, quality of service and a business model that makes sense, is the right one. During a review of our weekly stats today, all signs point to that. We’re now powering well over 15,000 sites, driving over a quarter billion page views a month with over 11 million uniques a month. Thanks for being human ;-).
iMedia Connection has just published an article written by Eric about what widgets mean to online portals like AOL, MSN and Yahoo, and the opportunity it presents to portals.
In his article, Eric makes the argument that, “content producers and third-party widget providers increasingly have convenient ways to bypass portals by distributing content and other user experiences directly to consumer-controlled pages.” He adds that, “the winning strategy for traditional portals is to extend the reach of their advertising platforms by offering independent web publishers something portals have produced very well for years within their own domains: compelling content and highly interactive user experiences. To do this, portals must package and deliver these experiences in a highly viral, self-serve fashion. That means widgets.”
Here’s the full article.
Do widgets spell doom for portals?
By Eric Alterman
Widget providers increasingly are bypassing portals and distributing content directly to user-controlled pages, requiring portals to evolve. KickApps’ founder explains.
The universe of websites has a very long tail, and soon it will be clear that earning real estate on those websites will be the primary mission of every major portal. Widgets will play an ever-increasing role in this evolution.
Prediction: Portals like AOL, MSN and Yahoo will eventually generate more impressions and ad inventory by exporting widgets to third-party websites than by serving retail traffic within their own domains.
Most people are still trying to figure out what widgets really are and their importance, but few are looking at the role traditional internet portals will play in this new ecosystem. The major content portals like AOL and Yahoo used to define “distribution” when it came to web content (as both creators and acquirers of original content). Then widgets came along and increasingly “distributed” that distribution power to individuals and their personal pages (e.g. social networking pages, blogs).
The problem for traditional portals is that content producers and third-party widget providers increasingly have convenient ways to bypass portals by distributing content and other user experiences directly to consumer-controlled pages. While the major portals often own social network traffic (e.g. AIM Pages) and feed aggregators (e.g. MyYahoo), that traffic increasingly is splintered by third-party content and widget providers. In short, the entire web community is aggressively fishing in portal waters, and there are good reasons to expect that trend to accelerate.
The first step in recognizing that future growth lies beyond their portal walls was expressed through a series of multi-billion dollar acquisitions of various advertising platforms: AOL buys Tacoda, Yahoo buys RightMedia, Google buys Doubleclick, Microsoft acquires aQuantive, etc, etc, etc. But how will these ad networks compete for inventory across the ever-expanding universe of independent websites?
CPM guarantees and ad intelligence are ultimately limited product differentiators because hyper-competition can only mean commoditization and profit erosion, and mega agencies like WPP are also entering the advertising network game with their own acquisitions (e.g. 24/7 Real Media). What’s a traditional portal to do?
There are several possibilities, but I believe the winning strategy for traditional portals is to extend the reach of their advertising platforms by offering independent web publishers something portals have produced very well for years within their own domains: compelling content and highly interactive user experiences. To do this, portals must package and deliver these experiences in a highly viral, self-serve fashion. That means widgets.
Portals can evolve into hubs that serve an essential purpose in the evolving widget ecosystem, connecting the creators of content and interactive user experiences with the universe of independent websites. So in addition to inviting third-party content widgets into their own environments, portals that wish to thrive must also become major exporters of content and interactive user experiences. “Open-Portal” or maybe even “Anti-Portal” may be the best way to describe this new beast.
But will marketers, web publishers and content creators willingly submit to portal hegemony once again? The answer is yes, I believe, so long as portals deliver what these players really need. Creating richer media experiences and more audience interaction requires increasingly complex technology. So the kind of portal widget platform I’m talking about must include functions such as easy media management, profile management and administration; consumer experiences now require more technology than most publishers and content creators can reasonably afford.
Portal platforms must also distribute widgets that click to deeper user experiences (e.g. “Deep Widgets”) on landing pages that engage users with both editorial and user-generated content. In that sense, widgets distributed by portals become windows into richer, more engaging user experiences that generate incremental ad inventory, monetized by both portals and their website affiliates. These landing pages must maintain the branding of independent websites with the help of APIs, CSS and customizable templates, and must similarly enable member and profile integration with the existing user base.
The idea of internet portals morphing into “wholesalers” of programming to many thousands of “affiliates” should not be surprising. Wholesale distribution is the driver of nearly every major industry (from manufacturing to major media). The television and film industries have worked that way for decades. NBC earns the right to sell advertising across thousands of independent television stations by providing those stations programming that is often aggregated from many sources. Similarly, internet portals must earn the right to place advertising across the entire internet by leveraging a sophisticated platform to distribute both content and interactive programming.
While portals like Yahoo and AOL may capture dominant market share relative to other websites, their audience growth is modest relative to the aggregate audience of large and small websites across the internet. The universe of websites has a very long tail, and soon it will be clear that earning real estate on those websites will be the primary mission of every major portal. Widgets will play an ever-increasing role in this evolution, and marketers, for one, are beginning to take notice.
Following on from Daisy Whitney’s New Media Minute video blog about KickApps’ free programmable video player, Chris Anderson, the guy who made entrepreneurs include a ‘long tail’ strategy in every business plan, has a new book coming out called Free. This month’s cover story in Wired includes a 6,000 word excerpt from the upcoming book. Anderson breaks down ‘free’ business models, such as Freemium, ad supported and cross subsidies.
Free for us is about lowering the barriers to entry, eliminating risk and making KickApps as accessible as possible. When we have conversations with people about using KickApps, one of the points that we always make is: “It costs you nothing to use KickApps. All you have to do is sign up and you can start using the entire KickApps suite.”
Social media applications shouldn’t be about deployments that require $500k in software licensing fees and $1m in services just to realize 6 months into it that what you’ve bought doesn’t work or is obsolete. It should be about knowing exactly what you’re buying, being able to start building right away at as little cost as possible and getting your product out there.
Last week we had a chat with Daisy Whitney of TV Week about the way customers use KickApps’ online video players and our social media applications. We talked about how it costs publishers absolutely nothing to use our platform to build highly engaging social networks that are chock full of social media applications like user-generated content, online video players and widgets for viral syndication of content. In this week’s New Media Minute, Daisy hit on this very point (see clip below).
In our Ad Inventory Network, any publisher can create and deploy the entire KickApps suite of social media applications for free. This means a number of things. The most obvious being that we’ve removed the barriers to entry to social media for any publisher. Another is that we’re not hiding anything–you can see and use everything that we’ve got to offer at no cost. This eliminates the risk and uncertainty for any publisher evaluating vendors in our space.
When we talk to our customers, we often hear about the hefty cost of up front investment, fat custom development fees, etc., before they can even get their hands on a product and start using it. We believe in removing risk and showing upside right away. This is one of the reasons that we’ve designed our business model this way.
Back to Daisy’s New Media Minute video blog. She notes that publishers typically go to a vendor like Brightcove for their video solution (some even use YouTube). While both are good solutions under the right circumstances, we think the ability to have video and program it should be available to any publisher who desires it.
On top of this, we see video as one of the many entry points into social media. Once a publisher has video up and running, oftentimes the next logical step is to begin implementing other social media applications, such as widgets to syndicate the video, or social networking features to create a community around the video. You see where I’m going with this.
As usual, we’ll be talking about how you can use social media, widgets and online video players, to grow and engage your audience. Come by, have a chat and we’ll show you how easy it is to create your own branded social media experiences. We’ll be at booth 710/712 (strategically placed by the bar!). Also can be found searching for the perfect BBQ throughout Austin.
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