Stop Whining About How Elitist And Expensive TED Is [Just Because] You Didn’t Get Invited
Feb. 15, 2010, 9:17 AM

>> Too bad you missed it! Larry Page gave everyone a free Nexus One.

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via Silicon Alley Insider.

(Minor edit for colorful language.)

What is amazing about this (the subhead sentence after the headline), is not what it says about TED, but what it says about the future of content creation, and the question of charging for it.

Yes, Larry Page is a multi-billionaire who gave away free Nexus Ones created by his Fortune 500 (currently ranked #150) company, Google, to other well-to-do folks who were able to afford to pay $6,000 for the exclusive TED Talks experience. In doing so, he is following word of mouth (WOM) marketing model 101, of getting your product into the hands of key influencers, and hopefully winning them over, and getting them to evangelize your product.

But aside from all of that, he is showing what the future really holds: With ever cheaper reading & communication devices such as the Nexus One, it will become increasingly common to give those away to users, JUST to have SOME influence over what content (and thereby advertisements) they consume.

In essence, such a give-away represents A PAYMENT of the consumer for consuming content on the “gifters” platform. That is how important it is to get some, any slice of the attention pie. The getting of some of which implies that you will have opportunities down the road to do business with the “giftee” in the form of offers (ads or otherwise) that can be embedded with the content.

Note that it is taking for granted that a lot of content itself cannot be charged for. Why? …

…Because just like the devices it is shown on, much of that content is becoming commoditized.

There is an over-abundance of it, and certainly no scarcity at all. If the supply is going to infinity, and the demand is finite due to people’s limited amounts of attention, then the price is by necessity going toward Zero.

Now contrast this with the way that Old Media publishers have been trying to put the genie back in the bottle, and start charging for their content again, with so-called Pay Walls and other ill-conceived schemes.

Contrast it with Microsoft, which, when announcing the finally updated version of its mobile OS, made it clear that it intends to charge a licensing fee to handset makers, even though its market share in mobile has been languishing around 10%, and Google is giving away its Android mobile OS for free. All while Apple has built up a huge lead with its iPhone in the smart phone segment.

Silicon Alley Insider correctly points out that Microsoft’s stubbornness on this point is illogical, because even under the most optimistic scenarios, Windows Phone 7 won’t hardly be noticeable on their bottom line. It is however setting it up for failure in the race for market share and resulting mind share.

Microsoft’s question should be: How can we maximize our share of the attention pie for our mobile OS ecosystem? How can we catch, or better yet outflank, the iPhone?

Similarly, Old Media companies should be asking: How can we maximize our share of the attention pie for our news, opinion, and other content ecosystem?

Anything else is folly at this point. Once you have the attention, there WILL be opportunities to monetize, simply by virtue of people being in your ecosystem. Compare how street vendors benefit from people simply being at an event.

But you cannot choke off the oxygen and lifeblood of your ecosystem with Pay Walls, and other walls and barriers of any kind at the ENTRY point. If next to no one lives in your ecosystem, you won’t be selling very much to anyone.

And remember: The first sale is always the hardest. Why not make it much easier, and make the first sale…well…FREE. Someone taking your free offer still constitutes a sale, because they paid you with their valuable attention (time and energy).

Even better, PAY THEM to “buy” from you in the first transaction, as Larry Page has demonstrated with the Nexus One give-aways. Those cost real money, and yet it is still in Googles interest to be giving many more away.

Notice what Google has been doing all along, they have been giving away free copies of a lot more than just digital content (actually Google doesn’t create content at all): Google applications of all stripes and colors, including Gmail, Google “office” apps, Google Maps, Google RSS Reader, etc. etc.

Why? Because it keeps you on Google’s platform for a little longer, so that they might have SOME influence over what you are shown in terms of advertisements, and other offers that go along with the ecosystem.

Notice the deep misunderstanding by the parade of other companies, especially news and other Old Media companies, that have recently been trying to crucify Google over spreading their content through their search engine without reimbursement, not understanding that that content is typically lowest on the totem pole of usefulness:

The New York Times for example is still dreaming about charging for their news content, when it has about a 6 hour half-life (that’s why it’s called “old news”). Compare that to Google giving away productivity apps that can be useful to you for months and years.

What’s  your take away: Massively Move The Freeline, so that you may even have an ecosystem in which to sell anything.

Semantic advertising. [...] Since conversations on [Google Wave] waves have to go through the server each time, a semantic engine could parse them on the fly and serve up relevant text ads. With enough data and training, a semantic engine could decipher intent, i.e. whether you’re talking about your trip [...] last summer, in which case ads would be useless, or whether you’re setting up a wave to plan a trip [...] with your friends, in which case ads for cheap flights and hotels are relevant.

Intent is the reason why nobody clicks on ads in social networks but they do in search engines. A semantic engine would know that 99% of the times you’re waving an ad would be irrelevant at best. So 99% of the time people wouldn’t see ads at all. Wave, Inc. might set this up on their own servers and allow others to set it up on theirs under a rev[enue]-share agreement.

Over the long term, Wave, Inc might also open an ad network [...]. This would be good for consumers since they would get few ads, and only relevant ones, good for advertisers since they’d get high clickthrough, and good for Wave, Inc, since they’d have a high quality, expensive inventory. This might be the thing that makes online ads something other than punishment for using stuff for free, but actually something useful and exciting.

Problem: semantic technology is still inchoate and execution would have to be flawless for people not to find it annoying and/or creepy.

Read that 2nd to last sentence in bold again. Therein lies the crux of the failure of online advertisement in most areas other than search ads.

For more proof of how badly current ad models are failing, witness the stats that MediaPost Publications just posted in ComScore: Most Clicks Come From ‘Natural Born Clickers’ 10/02/2009:

Indeed, the number of people who click on display ads in a month has fallen, from 32% of Web users in July 2007 to only 16% in March 2009. Worse still, an even smaller core of consumers — representing just 8% of the Internet user base — accounts for the vast majority, or 85%, of all clicks.

Now while the strong "few users generate most clicks" imbalance is predicted by the 80/20 Principle, the reduction BY HALF in less than two years is indeed stunning, and cannot likely  be explained away with the recessionary economic background alone.

It is far more likely that users have systematically trained themselves to mistrust and hence to simply ignore online ads altogether (other than MAYBE search ads).

The situation of internet users ignoring internet ads is apparently becoming so dire, that comScore et al. are beginning to sound like TV advertising execs in their pitch to ignore the bad news (from the same post):

"Marketers who attempt to optimize their advertising campaigns solely around the click are assigning no value to the 84 percent of Internet users who don’t click on an ad," said Linda Anderson, comScore VP of marketing solutions and author of the "Natural Born Clickers" study. "That’s precisely the wrong thing to do."

Rather, as comScore research has shown, marketers need to embrace the fact that non-clicked ads can also have a significant impact on consumers.

Basically, the argument goes: Ignore the fact that no one is clicking your ads anymore, those ads are still somehow reaching consumers on a subconscious level, and will (magically) continue to build your brand (and ultimately sell your stuff) that way.

When the Internet guys are telling you to forget "measurable" and instead extol the virtues of Madison Avenue-style image advertising, you know something is afoot.

Now it is fair to point out that people do in fact retain contents that they saw even if the "seeing" never reached the level of top level consciousness. As such, in a recession, one might argue that there could be value in a company advertising simply to "ping" the consumer in a "we’re still here" sense? (Especially if the collapsing ad rates make it cheaper than ever to do so…)

But now remember the phrase from the first quote: "…the thing that makes online ads something other than punishment for using stuff for free". Then think about how sure anyone could be that their mere ad presence actually engenders much love from anyone at this point.

Rather than ask themselves the hard question on how to finally make online ads work, online ad stake-holders give you evasive platitudes. That’s simply not enough.