Its interesting to note how this article actually came by. I originally started to write an article to evaluate the currently existing revenue generation models for software selling. I had my opinions about one of these models - the online advertising revenue generation model that allows the content or software to be free. However, as I was reading more and more stuff on this model, I started to realize the number of companies that have actually got into this business and how and where they are kind of fitting into this exact scene. I still do not change my opinion completely and I guess I will talk a lot more on that in that other article - but all these readings certainly made me to give it a thought to write on just how much action is going on with this online advertisements and give my opinion on - if its all worth it?
Online advertisement as such is not a new thing - its just that Google - the first one to hit the jackpot with this model - tried to bring out something that I would call interactive helpful advertising. And Google’s revenue figures today make every other company - big or small - try to get into the online advertisement arena in one way or the other. Microsoft has come up with AdCenter and Yahoo is trying to market its Panama project in response to Google’s AdSense.
Google’s advertising now is not just restricted to the plain vanilla HTML pages but has exploded its way to personalized pages (such as your email inbox), social networking sites, user generated content pages. While both Google and Yahoo’s programs provide relavent advertisements based on numerous factors - Microsoft is marketing its AdCenter by letting the publishing agencies know that they consider the viewer’s demographic information as well - another step in trying to make the advertisement as relavent as possible.
And apart from the big players, there’s a large chunk of small players bringing in interesting innovation in different dimensions to pull some market share from the biggies. There’s TACODA (www.tacoda.com) using behavioral targetting rather than plain content specific advertising. TACODA tracks user’s behavior across sites and then uses it to advertise on different sites rather than just going content-driven for determining the advertisements to be displayed. There’s Ingenio (www.ingenio.com) providing Pay-Per-Call model over the traditional Pay-Per-Click one. So, the advertiser pays not for a click to the site but actually for conversion of the click further to a call to the advertiser’s office.
Further, as the online advertising matures and sees an expansion of the value chain, there’s a large number of companies coming up who are trying to fit into the existing pie. This includes SEO companies helping make sure their sites appear at the top of the list on searches. There are marketing agencies mixed up with some SEO techo knowledge helping advertisers determine what keywords they need to bid for.
On the other end, advertising is moving ahead from simple text content based web pages to Podcasts, videos and even games. Microsoft’s acquisition of Massive Inc. (www.massiveincorporated.com) last year for advertising in XBox games and Google’s recent acquisition of AdScape (www.adscapemedia.com) just goes to show how much potential these big players see with online advertising on a variety of media.
Looking at all these developments from the top, and coming back to my topic of the original article that I actually started to write, are we really moving towards the business model that provides the actual content or software free of cost and keeps the cash register ringing from advertisements? Or to put it more precisely, will the content provider companies be able to generate enough revenues to support the content/ software services they provide? And if yes, it will be extremely interesting to see how market share for different types of content and software services shifts between the current big players? (Imagine Microsoft Office for free with advertisements!). I will continue my next post with the original point of discussion and I beleive I would be able to complete the circle of opinion with that post.
