How To Split An Atom

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Welcome back to our weekend post on the future of the Web. Last week one of my readers asked an interesting question about Web 3.0, “What will advertising look like in the new web.” If you take a look at the evolution of online advertising in the last ten years you will see a market that has gone from purely banner advertising to painful pop-ups to the rich array of advertising alternatives that we currently tolerate. What will the future look like? Lets explore the issue.

Web 3.0

As always, lets start off by giving How To Split An Atom’s definition of Web 3.0:

Highly specialized information silos, moderated by a cult of personality, validated by the community, and put into context with the inclusion of meta-data through widgets.

Publishing

The first thing that we should look at are the different publishing options that are currently coming into fashion. As our ability to produce new content and promote improves, the move will be from purely text options to richer media like podcasting and video blogging.

Podcasting

Ease of production, increased quality and the creation of more strongly branded Podcasting networks will mark the next evolution in Podcasting. Networks like TWiT and PodTech are prime examples of this movement. As genres become more tightly defined, PodCasters — at least those who aspire towards a wide distribution will realize that combining their content will allow them to scale their operations to the point where advertisers will be much more willing to take them seriously.

Ad Placements

The first and probably most common form of advertising that will define Podcasting in Web 3.0 are pre and post-roll advertising. Since content will be longer, and it will streamed continuously, podcasting will more closely resemble terrestrial radio stations. As such, these podcasting networks will be able to attract advertisers who have a specific interest in courting the extremely specialized niches of most podcasts.

Advertising itself will have to be redesigned to properly exploit a listening audience that is so deeply segmented. At present, most advertising is designed for audiences with little knowledge of the technical specifications of products; however, listeners of — for example — tech podcasts may be turned off by advertisers who they feel produce patronizing content. Advertising will have to become more sophisticated and provide more value by both entertaining and informing the listening audience.

Related Companies: PodTech, TWiT

Contextual Advertising

Google is currently experimenting with contextual advertising designed for rich media content. These contextual ads will likely take the form of pre and post-roll advertising as well as ads placed inside the content itself.

The current technical barriers are that the software needed to actually transcribe the podcast content such that keywords can be extracted is in its infancy. Web 3.0 will mark a substantial improvement in audio analytics, and will enable the use of contextual advertising.

The major sociological hurdle is how to place advertising without losing content quality. Right now, most people are pretty used to ad banners and have learned to ignore them. The difference when it comes to rich media content is that these ads will be impossible to ignore. Since all of this content will streamed it won’t be long before software is developed to strip these ads from the mp3’s themselves.

Alternate Advertising

Portal Advertising

While the vast majority of podcasts will be distributed through content distribution systems like iTunes, there will still be a substantial amount of viewers who get their content straight from the media portals themselves. Instead of placing advertising inside of the content itself, an alternative method may be to place the ads around the content itself. Especially in services that use specialized flash players to deliver their content, text based advertising might be a way to move into a new media while still retaining the strengths of a previous one.

Product Placement

Like radio before it, as PodCasts begin to produce “personalities” the move towards product placement will only increase. It has always been more effective to have a “real person” promote a product than to do so through traditional advertising. That’s why sponsorship contracts are so lucrative.

Overview

For PodCasts, advertisers will have the advantage of being able to target very specific niches. Clever companies will be able to use this fact to substantially increase their conversion rates by creating cheaper advertisements geared towards describing the added benefits of their products over their competitors. In a lot of way, Web 3.0 advertising will more closely resemble television advertising in the 1950s. Companies will rely heavily on product placement and informational advertising directed specifically towards a tech savvy audience.

Related Companies: PodZinger, CallMiner

Blogging

As pay per click loses its appeal in the wake of lower and lower conversion rates, the future of online advertising for blogs and other information portals will take on a “pay for time” model. Instead of advertisers paying for the number of clicks, they will contract bloggers out for particular periods of time. Depending on the placement of the ads, and the nature of the advertisement, the advertisers will pay a flat fee. The contracts will be renewed should the blogger maintain a high enough conversion rate. Text Link Ads currently follows a similar model, offering a residual for the right to sell text links on your site.

Alternate Forms

As blogging becomes a more important medium, direct sales of advertising will become more common. Major companies will develop simple ways to price advertising based on traffic and “popularity” statistics. Using this, they will be able to more easily treat bloggers in the same way that they treat other more mainstream news sources, purchasing advertising space for blogs that meet specific demographic criteria.

The biggest enabling technology for such a change in how advertising operates will be in the ability to match companies to bloggers with minimum friction. Currently, selling advertising directly to companies requires a substantial amount of effort. In Web 3.0, the system will be made more smooth through freely available and highly accurate statistical data.

Related Companies: TextLinkAds, Pay Per Post, Compete

What Will Ads Look Like?

For this section I am concentrating specifically on rich media advertising. Text based Ads and banners will continue to become “prettier” but they do not seem primed for any significant technological improvements. Where there will be a change is in video advertising.

As it stands, the line between advertising and entertainment has already blurred. In Web 3.0, this line will simply cease to exist. Advertising will be such that it is completely indistinguishable from entertainment. Ads will be designed to make brands memorable, and drive people to seek out more information for themselves. Viral marketing will come to the fore as advertisers attempt to tap the huge number of eyeballs that the internet offers them.

Success in the new advertising model is in the number of people that you can get to actually view your ads. Assuming that only a tiny fraction of people will ever be converted by advertising, developing extremely viral, extremely popular content will maximize the number of people available to convert.

Look forward to advertising networks on portals like YouTube and Joost, and longer advertising blocks that seem more like short films than commercials.

Related Products: YouTube, Joost

Summary

• Increased number of product placements
• Pre and Post-roll advertising on PodCasts
• Increased number of PodCasting networks
• Pay Per Time Advertising Models
• Post and blog sponsorships
• Advertising as entertainment

Web 2.0 Roundup

Here are a few related articles to round out your education on Web 3.0.

Defining Web 3.0
Enabling Technologies For Web 3.0
Blogging In Web 3.0

[Thanks to Todd Ehlar for the images]