The root problem facing newspapers (and other mainstream publishers) isn’t so much falling ad revenues. That’s just a symptom of a greater problem. The bigger problem facing mainstream publishers is that ad technology hasn’t caught up with content technology.
Right now, there are so many ways to publish and distribute content. But there really aren’t that many way to distribute and target advertising. The result is that the ad space that’s up for sale is worth a whole lot less than the content it appears alongside, and that means that publishers have to operate at a loss and advertisers have a demand for ad space that no one’s offering.
The upside to this, of course, is that there’s a considerable market opportunity for anyone who figures out how to fill this unmet demand (and, in turn, possibly save mainstream publishers). And that oppotunity isn’t that far out of reach because everything needed to fill that demand is readily available. There is so much user data floating around the social web that cloudvertising might just be a viable solution to help publishers help advertisers reach audiences that’ll actually convert.
Between the data that a portal can collect directly from their users and the data trail that those users leave all over the world wide web, everything that advertisers need to hyper-target consumers is already in the cloud. All that’s needed is a reliable way to aggregate and mine it so that users can be shown advertising they actually give a sh*t about.
“Mining the cloud” is part and parcel of what social news organizations (SNO) will do as they evolve. By integrating social media features into its content, both internally and through third party APIs (such as sharing features via Twitter and Facebook), an SNO can actually use users to target advertisers.
The idea behind cloudvertising is that publishers approach readers as users, and then collect data (1) directly from their activity on their site and (2) indirectly from their activity elsewhere on the social web. In a nutshell, publishers leverage third party APIs so that they can profile users/readers and make sure they show them offers that are relevant to them. Although it offers the advertiser less control to pick and choose their audience, it does offer them better targeting and refined results.
By leveraging third party, social media APIs, publishers can develop more comprehensive profiles of their users because they can more easily monitor their users’ activity on social networks. While some APIs will offer them direct access to user data, all APIs will help them (1) identify user profiles, (2) index the activity and content on those profiles, (3) read users’ cookies when they return, and (4) hyper-target offers according to users’ actual interests and recent behavior.
Mining the Cloud
An ad platform that could hyper-target according to both an internal user database and user-data aggregated via a third party APIs is something that could rival Google (or maybe even only be developed by them). So it’s unlikely to be developed by a content organization, so matter how social they are, or what kind of R&D ad lab they have.
What publishers can do, however, is start (1) replacing their ad-sales departments with a comprehensive, internal marketing agencies (like Vice Magazine has) that can (2) start mining user data, (3) diversify ad offerings accordingly, and then (4) collaborate with editorial to develop symbiotic content model.
Mining tends to be a dirty (and dangerous) business that doesn’t yield returns until considerable investment have been made. But it’s also the only way to access critical resources. So while ad technology companies might want to start thinking about cloudvertising so that they don’t end up in a plight similar to where publishers are now, publishers might consider doing what little small-scale mining that they can manage on their own.