01/19/09 :: [Other] Really Shortsighted Syndication [permalink]

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Last week the Wall Street Journal had a really interesting article about Microsoft's tortuous Online Advertising History: Microsoft Bid to Beat Google Builds on a History of Misses.

The part of the article that caught my eyes was this figure:

[search ads spending]

 

I had read a couple years ago in Google's financial results that Search was growing faster than display ads but I had no idea that the damage was so extensive. I say "damage" because I can really see a strong correlation between this trend the the disappearance of the press. Everywhere across the country the press is being hammered by decreasing advertising revenues. Even the country's most prestigious newspapers are not immune to the phenomenon. Our own Seattle-PI may disappear in a few months.

Now, I am a geek. Dave Winer is also a geek, he invented RSS (Really Simple Syndication). Everyone I know at Google, Microsoft, Yahoo and Amazon is a geek. I am sure there are few that are not, but, their business model is also "geeky".

For instance, let's look at Google's business processes and technologies in more details. Google's processes were born after some insight into Overture's business. Overture didn't have a "search" business and was managing online advertising for large Web sites. Google automated Overture's business processes with ... search, a natural choice at the time. In that process, Google opened up the online advertising market to scores of Mom & Pop web sites. When Google decided to tie online advertising and search, they sealed the fate of the press. They sealed the fate of the press, not just because they spread out an advertising pie to more "publishers", they sealed its fate because they decoupled advertising from "content". Did they do it on purpose to capture a larger share of revenue? was it a geeky mistake (as in honest mistake)? It does not matter, the damage is here.

Incidentally, Google's advertise-to-cash business processes are fundamentally flawed. If you look at it in detail, there are only two roles outside of Google: the advertiser and the ad-publisher. Please, note that I do not say "content publisher". This again looks harmless. Yet, we may realize that when Google decided to aggregate the publisher and the content author roles into one, they basically forced people like me (content author) to become a publisher and they forced publishers to "hire" content authors. Again, I would easily argue that this was a geeky mistake but in this day and age, it is accelerating the press agony while crippling the online advertising market as advertisers experience more and more difficulty in relating "content" with advertising.

I would like to argue four points:  

1) The rise of search is destroying the Web as a branding platform: if search may indeed find some "instant" customers, advertisers are returning to traditional media (TV, Radio and ... Press) for branding activities which is one of the core markets for ads. This is why the online advertising market is saturating and never reached the projected $80B.

2) The rise of search is partly due to click-fraud: I have not checked lately if Google has improved its algorithms to detect fraud but I did an experience two years ago where I used two different AdWords accounts to advertise a free community teaching tool that helps children learn how to read. As you can guess, one was set up with "search" and the other one was set up to display ads on related web sites. Surprisingly, the display account would reach its limit within the first hour of the 24 hour period, while the "search" account would nicely build up over the 24 hour period and reach its limit randomly. As a result of potential click-fraud, advertisers are limiting their display dollars, which in turn impacts the press.

3) If we were to create additional syndication business processes that relate publishers and content authors, we would enable the press to increase its revenue: publishers could select more content without having the need to set up complex relationship and revenue sharing strategies, and similarly, their content could be syndicated in other newspapers, blogs or social networks, again bringing more revenue to the publisher.

4) RSS and ATOM are terribly shortsighted syndication technologies: unfortunately, these technologies were invented by geeks for geeks. They are useful, yes, but their side-effects are dire. We need a technology that will allow syndication with revenue sharing, while leaving some control to the publisher to integrate the content and the ads into its site layout.

 I hope that Google, Microsoft, Yahoo and Amazon realize how critical online advertising is to a strong and independent press, and ultimately to society, and that the current online advertising business model is killing it. I also sincerely hope they realize that the press can thrive again if only the eternal bond between content and advertising is renewed.

 

Jean-Jacques Dubray