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Ad Money Will Play "Follow the Leader" to the King of Links

21 Apr 2009

FollowTheLeader

What any advertising campaign ultimately wants to achieve is an
improvement in company profits.

Historically this has been done with banners to interrupt and saturate potential customers with brand recognition.  A small percentage of viewers will feel compelled to purchase the product. In the modern (ever changing) business landscape this is usually achieved by being in the right place, at the right time.  Say I'm web browsing for great fishing rods in San Francisco, if you showed up at the top of Google you're in a prime spot to further your business goal of making the connection between your business and me (an interested and willing buyer). 

Increasingly, the flow of web links is being made between individuals via social media sites.  Your good fishing buddy who knows the Bay area, shares a link to his favorite supply store. As focused communities become populated across geographic barriers, local quality referrals become more likely.  But what if you want to know what store fishermen prefer in San Francisco?  You could simply use twitter search for fishing san francisco.  In real time you could send a message to several individuals who are interested in fishing in that region. Successful social media will judge individuals by the quality of their referrals, the best will be known as field experts.  This expertise will garner increased customer reaction and social pull, as well as equivalent advertising dollars.  Social networks that reward (profit sharing) their strongest referrers (crowd sourced link voting) and content builders will succeed, while those that try to hoard income will be abandoned like ghost towns.

A quick background for those unfamiliar with web advertising:

In the current web advertising system there are several cost structures for paid ads.

Advertising dollars naturally flow to those services which yield the best (lowest) cost per action.  A complication is that each marketing case (company/product/website) will have it's own dynamic conversion for impressions to clicks to action (i.e. a product purchase).

So what defines the link leader?

Easy, whoever "owns" the most referral links shall inherit advertising dollars. Right now it's the best search engines  (Google for much of the world, Baidu for China and some of South East Asia).

But there is a change taking place.  Users are proving that they don't need one company to tell them where to go.  Social bookmarking sites are "self organizing" much of the real time internet.  Digg, reddit, Delicious, twitter, and Facebook are some of the crowdsourcing website leaders.  Email of course is another major social link sharing source.

People are being supplied great, desired content before they perceive a need to search for it.  What this means for search monetization is that it will have to adapt to how people use the internet to find products.

Where is the opportunity space of tomorrow?

Future business opportunities will lie in optimizing the connection between potential consumers and companies.  As this connection becomes stronger, it will push the best companies and products into larger shares of competitive market spaces. Outside of direct advertising, why do users promote a business within social media? Having excellent content, a compelling story, and being trusted are the pillars of a successful web business. A companies story has to be remarkable enough for me to share (or at least the best in it's neighborhood).  Newcomers visiting the site have to trust it enough to take action (i.e. making a purchase on a website or signing up).  Scam artists erode our trust in human referals, so any successful social advertising business will have excellent tools for identifying and removing them from the system.

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