Wednesday, September 20, 2006

Advertising knocks Yahoo value

Yahoo's share price took another hit yesterday as it warned that slowing advertising growth will depress its third-quarter results. Shares fell by more than 11%.

There is an element of 'I told you so' in this response.

Scream marketing has had its day. Many advertising models are just old fashioned.

Now this is a big problem for a whole range of social media initiatives. They try to find way of generating income and advertising seems to be the only solution.

Well, until now, this was OK but people who use online services, just as for all other media, are simply not enthralled by having a marketing managers idea of fun thrust into their eyeballs.
As Ryan Stewart at ZDNet put it:
...the savviest web users have trained themselves to ignore the text and picture ads that they see on nearly every site they visit. Clearly these have become the staple of internet marketing, and they won't go away because they do work for some things. Advertisers can segment their campaigns more effectively, targeting sites that have users with the demographic makeup they want. Search terms will continue to show intent and provide web companies with a healthy revenue stream. But the road to a profitable web application is not paved with simply eye balls and page views.

So what are the alternative.

I think we are near a tipping point where the online community can get to products without advertisers getting in the way.

Building a community of interests (note plural) has considerable mileage.

For example, to get more people to your music site so that you can sell more tracks may mean hosting a lot of 'free' tracks that people can down load and occasionally buy a paid for track. To do this you may want to build a community of podcasters who use the music on your site to get some tracks up the ranking so that they can be included among in the 'paid for' portfolio. Here are two communities. The musician community uploading track for free play and podcasters.

Developing the range of communities is not hard but it is time consuming. It is not cheap and you do need a lot of analysis to hand.

What I need now is a semantic analysis tool to be able to identify the notions that are attractive to the audience. Then I can start building campaigns.

So Girish is building one next month.