I just ran across one of the most interesting blog posts I’ve read lately speculating on Web 3.0 over at Master of 500 Hats.

Not to steal Dave’s thunder, but there are a couple points I want to highlight.  The Microsoft bid to buy Yahoo is primarily to shore up it’s dominance in the Email/Instant Messaging online sectors.  Sure there are side benefits like buying up Yahoo’s advertising, search and traffic, but the winner of the Internet will be he who controls the user.

But with the battle to own the user comes the battle to own the user’s social graph, currently controlled by Facebook/MySpace/Bebo/hi5/could continue to list ad nauseum.  I keep referring to it, but all future web advertising will be contextually driven by your social graph, where brands are providing social relevance to users.  Ie. “Your friend Katie just saw (insert cookie-cutter Will Ferrell movie) and rated it 5 stars!” (ok I kid, it will be impossible for a Will Ferrell movie to be rated as excellent again… the days of Old School and Anchorman are over).

I think it’s also highly important to note the fact that we as users on the Internet now have hundreds of logins/passwords for every individual site on the net.  This is a problem that needs to be solved, and while attempts have been made (Microsoft Passport or the community driven OpenID), nothing will happen until one company owns enough of the user’s Internet life to make it beneficial for the user (really, what’s the difference in consolidating your logins from 60 to 50?).  Alternatively, if the smaller communities can build enough momentum around the OpenID concept, it could be viable, but whether that is a possibility remains to be seen.

The final piece of the puzzle are the e-commerce/payment conglomerates.  Look for the Microsoft/Google duopoly to put pressure on eBay (and their very valuable PayPal) and Amazon for merger/acquisitions in the next few years.

Where do the small players stand in this heated battle?  Well, I sort of compare it to the open source community who has not only weathered giants like Microsoft’s attempts to push them out, but actually blossomed in the modern Internet era.  If the small guys can provide real value to users, by churning out innovations while being completely flexible to quickly capitalize on new ideas, they will have a direct line to sink their (small) teeth into the necks of Google and Microsoft.  And instead of a one-sided parasitic relationship, Microsoft and Google will leverage these small-time players to come up with new innovations and either partner or swallow them up for big money when it makes sense.  And sometimes these guys will have such momentum that they will swim past these sharks to potentially become a shark themselves (could Facebook be this shark?  That question requires an entirely new post) (and one more side point - I’m not sure whether I should perhaps be calling Microsoft and Google ‘whales’ instead).

The Internet and Web 2.0 is a playground for innovation due to the extremely low barriers to entry and it’s massive channel to instantly reach all users around the globe.  It’s an exciting time to see all the fish in the sea battle (and work symbiotically) to control the Internet.

Tags: Advertising, Facebook, Google, Marketing, MySpace, Social Network by Tim McKillican
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One of the traditional kingpins of mass marketing - the Television - is slowly beginning to see the light shining from the modern advertising revolution. The 6 big cable companies in the US are teaming up to develop a customized and targeted ad system, paving the way for potentially lucrative advertising deals that can target ads based on a viewer’s viewing habits and demographics, giving the viewer a much more relevant and contextual ad viewing experience.

Now how does this relate to Facebook? Well, the goal of any advertising platform is to produce relevant ads that are in line with each individual’s interests and demographics. It’s in the advertiser’s best interest to maximize the relevance of the ad for each user, as forcing a 25-year-old male bachelor to watch a commercial on teen fashion products is pretty damn inefficient.

But in order to optimize efficiency, the more information that is available about the user, the more the ad can be targeted to his or her interests. And who is best positioned to have a complete view into the details surrounding every individual’s life? Yes - Facebook.

Social networks are unique in that users frequently volunteer many details about their day-to-day activities and social connections, not to mention they provide detailed demographic information (education, age, political views, relationship status, etc.). Whoever owns this data has the ability to leverage it to build a very powerful advertising system. I’d imagine Facebook will first use this data to build an ad platform internal to Facebook - but there’s nothing stopping them from then going one step further to license this information to 3rd parties, whether it be CNN.com or a new TV-advertising platform (I know, I know, that privacy point again). Google’s grip on contextually-based online advertising is about to face another dimension in the advertising wars. And don’t you think Google has realized this disturbing fact?

Now to address the privacy police. Of course Facebook, Google, and anyone else who owns private customer information would not dare to release it without the user’s consent. No one is disputing that fact. But as with any market-driven solution - Facebook et al. must will come up with an incentive so that it’s in the user’s best interest to make their demographic information available (individual identities will remain private, of course, so this scenario is quite feasible). Those who choose to remain anonymous can do so, but their personal experience will be limited, and most will end up consenting so as not to disrupt their experience.

This mutually beneficial relationship will drive unmatched efficiencies in modern advertising. You’re a 25-year-old male who just bought a new pair of skis? Let me show you an ad for Whistler promoting the powdered ski slopes and the happening party scene. Swap the 25-year-old to a 55-year-old and we’ll instead contrast the powdered slopes with some fancy dining and relaxing amenities. This will all be done automatically and will drive ad relevance and positioning to new extremes.

It’s an exciting time to be a part of the modern advertising revolution.

Tags: Advertising, Facebook, Google, Marketing, Social Network by Tim McKillican
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