Loading...
You are here:  Home  >  Web  >  Current Article

How Will The Web Monetize In 2020?

By   /   July 15, 2012  /   No Comments

Editor’s Note: Murthy Nukala is the founder and CEO of Adchemy, a provider of advertising technology for large brands.  On a whim

Screen shot 2012-07-15 at 4.39.08 PM

Editor’s Note: Murthy Nukala is the founder and CEO of Adchemy, a provider of advertising technology for large brands. 

On a whim, I recently purchased a Logitech Keyboard Case for my new iPad. Instead of being just a novelty accessory, the keyboard has fundamentally changed my device usage: I’m using my iPad-plus-keyboard in meetings; I use my laptop-plus-docking station at my desk; and I use my iPhone when I’m on the go. My online behavior, once centered on one device, has now been fragmented across at least three devices.

I suspect that I am not alone, and that this is the shape of things to come.

The web is on the cusp of massive change: By 2020, the number of global internet users is expected to quadruple to 4 billion, and most of these new users will come online using multiple devices. Additionally, existing usage will move significantly from the monolithic computer to mobile, as smart phones, tablets, smart TVs, and who knows what other devices further permeate both work and home life.

As the online population booms and usage becomes more and more fragmented across multiple devices, the key question is: How will all this multi-device traffic be monetized?

Chris Dixon recently blogged that most mobile apps currently fit into one of four categories:

• Time Wasters, such as Angry Birds and Plants vs. Zombies, primarily provide entertainment value.

• Core Utilities are those apps on the home screen of your phone, e.g., camera, phone, contacts, texting, calendar.

• Episodic Utilities, such as OpenTable, Uber and Hipmunk, are extremely useful in certain situations. Sometimes, I’m in the mood to find a new Thai restaurant. Sometimes, I want to know the score of specific baseball game.

• Notification-Driven Apps do just that – notify you. Notifications can be scheduled, for example, when something you want to buy goes on sale or when your PS3 is turned on at home.

Broadly speaking, these four categories also happen to describe how the web will be used and monetized in 2020.

• Entertainment will either be monetized by the content itself (e.g., paying for a game, or for a subscription to watch a show), and/or by advertising that will be broadcast in nature. Social ads on Facebook may not drive response as much as other online channels, but Facebook’s wide reach and high traffic will make it a natural venue for brand-awareness campaigns (e.g., opening night for a blockbuster movie).

• Core usage will be sold as stand-alone apps or subscription services (e.g., your monthly cell phone plan). Few people want to be advertised to while they are using a device for core usage.

• Episodic usage will mostly be monetized by advertising, which will be more targeted in nature (as opposed to broadcast). I use the term “advertising” broadly — e.g., restaurants that take reservations via the OpenTable app are essentially advertising on a per reservation basis.

• Notifications will be monetized via a combination of advertising, subscriptions and freemiums — all depending on the nature of the notification. Personal productivity notifications — like the app that reminds you to take a break every hour — will probably be free and most likely show ads with the option to upgrade to ad-free. Notifications that are based on some sort of purchase intent — like sale alerts — will be monetized by advertising. Apps that provide an ongoing service — like the app that notifies you when your PS3 at home is turned on — will either be purchased outright or be subscribed to on a monthly basis.

So, outside of entertainment and core usage, the bulk of the web will still be monetized the way it is today — via advertising.

Device Fragmentation = Market Fragmentation?

How will online advertising be different in 2020? The proliferation of devices fundamentally changes the online advertising equation.

Historically, we have primarily seen two types of online advertising: paid search and display. Paid search has been denominated in keywords. Display has fundamentally been denominated in cookies — impressions, clicks, unique users, reach, frequency, returning users, etc.

The biggest challenge to the online advertising industry of 2020 is the proliferation of devices. There is no “uber-cookie” that can track a user’s behavior across all devices she might own — and privacy advocates would be up in arms if one existed. Without an uber-cookie, it seems like the online advertising market is set to become highly fragmented by device. Fragmenting the online advertising market by device might seem like a natural outcome, but it’s not in anyone’s interests. Greater fragmentation means greater advertiser inefficiency, which means online advertiser spend doesn’t reach its full potential.

Is there a way to avoid fragmenting the online advertising marketplace by device? We only need to look at the paid search market for the right solution.

Like Search Queries, Episodic Usage is Rich with Intent

With episodic usage, we have a certain objective or intent in a situation, which the device or app helps us achieve.

When we issue a query to a search engine, that query has a certain intent associated with it, and the search results page and ads on it try to help us achieve our intent. As such, episodic usage is often “query-like.” For example, if I’m in my Urbanspoon application browsing for Thai restaurants in San Francisco, that behavior is the functional equivalent of going to my favorite search engine and entering the query “Thai restaurants in San Francisco.”

Additionally, if my device is geo-enabled, my location may help to provide further context around my behavior. My online behavior or the query is the explicit intent whereas my implicit intent is represented by geography, what device I’m using, what time of day it is, etc.

With paid search today, consumer intent is primarily explicit — it’s stated in a query — whereas with app usage and geo-enabled devices, intent is both explicit and implicit.

Explicit intent in queries is monetized in search by selling keywords. Keywords alone, however, can’t monetize implicit intent because implicit intent isn’t query based. For example, a user who queries “big apple” on a smart phone while in New York City likely has a different intent than a user who queries “big apple” within a Yelp app while in North Carolina. The first person is probably looking for tours of New York City; the other person is looking for reviews of a local pizzeria. Explicit intent provides the subject; implicit intent provides the context.

So keywords alone can’t prevent device-based fragmentation. Nor can cookies.

Intents are the Same on Different Channels, Apps and Devices

Regardless of whether I’m using a smart phone, tablet, laptop, desktop, or smart TV, browsing for Thai restaurants in San Francisco via Urbanspoon always has the exact same consumer intent associated with it.

In order to avoid device-based fragmentation in online advertising, a new unit of trade is needed — one that is neither keyword-based nor cookie-based, but rather intent-based. If consumer intent becomes the unit of trade, which device, app or channel (search, display, or social) a consumer is using no longer matters. An advertiser might simply buy users with an intent to buy basketball shoes or an intent to travel to Europe. Device, app and channel might only determine which type of ad to serve.

If an intent-based unit of trade can be used to monetize cross-device traffic, everyone wins. Advertisers and agencies will be able to maximize the reach and return of their campaigns, and they will benefit from cross-channel economies of scale. Publishers will monetize traffic better. And consumers will see ads that are more relevant to their intent.

Google has nearly a $200 billion valuation, not because queries are valuable unto themselves, but because queries are rich with consumer intent. If the rest of the industry can monetize intents across a multitude of devices as well as Google has monetized intent in search, then online eCPMs of 2020 will be on par with search eCPMs of 2012.

Image via lalunablanca

    Print       Email

Leave a Reply

Your email address will not be published. Required fields are marked *

*

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>

You might also like...

Image 8b1db1d882b6a9a020959480ad71580d

Sidestage brings its musician-booking platform to London

Read More →