Nice post By Sean Ammirati in Read/Write Web about the need for an Open Ad Network (like an open source project).
The idea is to develop an open source ad network that will let publishers get 100% of revenues from ads, and build a business model based on services.
Although the idea is interesting, I think there are two main problems with it:
- Ad networks today generate millions (and billions) of dollars in revenue from taking a cut from each ad revenue. This model is so successful because it can scale up all the time.
get more publishers to use your network - instantly get more money.
whenever a publisher gets bigger and more successful, also your revenues from it get bigger.
Compare that to a services model and you will see the big difference. There is a limit to how much revenue each publisher can generate for you. - The real issue here is also the ROI you give to advertisers. Today most advertisers go to Google because of the high ROI they can generate for them (because of their excellent targeting system).
Where most of the advertisers go, most of the publishers will go.
kind of a magic circle that is very hard to break
So where is the solution?
How do you come up with the Google Killer?
My answer to this is Video!
No one today (including Google) knows how to target ads to videos (although some companies are trying to do that - see AdBrite and ScanScout).
First of all there is the technical difficulty of parsing the video and get all the words (compared to text) out of it.
But I believe that it doesn't end here. We use words in video in a very different way than we use it in text.
In video we explain much of the things using pictures and sound. I think that in most videos, even if you parsed all the words out of it, you will still not be able to actually understand what the video is all about.
So what does it all means?
It means that in video, Google doesn't have any advantage on the next guy. This is the place where other players can gain momentum, gain publishers and advertisers by keeping to themselves a lower cut of the cake, and offer some new innovative products.
