Web 25: Open Borders and Walled Gardens.

Late October will mark the 25th anniversary of advertising on the Web. Having been part of the team that ushered in those first primitive digital ads in 1994, I’ll be using this space in the intervening weeks to explore the fulfillment, failure and future of the web’s marketing and social promise.  This week, the open web and the walled gardens.

That the Web would ever be a thing with regard to advertising was never a foregone conclusion.  At the time Wired Ventures launched the Hotwired site and its dozen hard-coded advertising sponsors in 1994, prevailing wisdom said it was a fool’s errand: the real money would bypass the edgy and dangerous web in favor of the existing dial-up BBS (Bulletin Board System) offerings from America Online, CompuServe, Prodigy and the first generation Microsoft Network.

This week’s Drift is proudly underwritten by Permutive, the data management platform built for publishers. Permutive enables you to increase your data-driven advertising revenue, whilst keeping user privacy at the heart of its technology. Permutive’s customers include BuzzFeed, Business Insider and MailOnline. Learn more here.

With the web now on everyone’s phone and digital advertising at more than $100 billion, the sentiment of mid-90s Madison Avenue seems quaint today.  But it was in fact based on solid logic.  Back then – when the web was nascent and browsing technology mostly experimental – getting a customer online and giving them any kind of consumer experience was a serious moat.  AOL’s discs and Microsoft’s bundling of web connection into its technology seemed like an insurmountable advantage – a wall most publishers and advertisers couldn’t imagine breaching.

Look at us now.

Twenty-five years later digital advertising again lives in a world dominated by a handful of walled garden experiences – Google/YouTube, Facebook and the rapidly advancing Amazon.  At this point we all know the stats about the consolidation of new revenue flowing to these three.  But now the moat that protects their advantage is not about access and consumer experience:  it’s now based on instant recognition of the consumer (and application of their data) and being one of the first mobile apps touched each day.  And while these are formidable advantages and consolidation is a natural and predictable state of affairs, hegemony and permanent domination are just a narrative.

As my wife Sharon and I often say to each other, two things can be true at once.

Most of the money and consumer time can go to the big three and there can be plenty of room and resources for open-web publishers and players to innovate and grow healthy businesses.  A handful of massive players can brilliantly anticipate consumer demand and social acceptance and also subsequently overplay their hands, reach a tipping point with consumer privacy and lose the confidence of advertisers.  The consumer’s digital and commercial life can seem fully tilted toward a triopoly of players and a thousand flowers can bloom.

Now, as then, publishers, advertisers and consumers will exercise choice.  Now, as then, great companies will evolve to meet the challenge while yet more will start to take shape.  Now, as then, nobody is guaranteed survival or a share of growth.  Now, as then, the survivors and winners will not wait passively for government intervention or a shareholder awakening. They will focus intently on what’s missing for the consumer and what’s not square for the advertiser.  Recognizing that incrementalism is the enemy, they will take big swings.   And they will build their companies and conduct business as though they’ll last 50 years.

They will do as they should, not just as they may.

Six Questions for Louis Rossetto, Father of Web Advertising

Louis Rossetto FinalYesterday, 10/27/14, marked exactly 20 years since Louis Rossetto and Wired Ventures launched the HotWired site, and with it created the first ads on the World Wide Web. I was honored to have been part of that organization and just last week caught up with Louis to hear his thoughts on that time and on what’s happened in the 20 intervening years.

1. Hot Wired launched exactly 20 years ago, giving birth to online advertising.  Did you ever think its offspring would be so numerous and prosperous?

When we were all standing around Brian Behlendorf’s screen and he threw the switch, I was just hoping the server wouldn’t crash when it got its first hit. No, actually, we believed that this was the future of media, and it would eclipse and subsume everything else we were doing. And all is proceeding according to plan.

2. You are first and foremost an editor and journalist.  What do you think of the writing and curation on the web today?

Actually, I’m first and foremost a troublemaker, which anyone who ever worked with me would attest to. But the web today — it’s like asking what do I think about the writing and curation of evolution. Because it’s the ecology itself that’s amazing. No one is writing or curating it, it is writing and curating itself. More and more, it’s becoming a quicksilver representation of the workings of the human brain — which is itself a manifestation of billions of years of evolution.

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3. What companies do you feel are really pushing the consumers web experience forward?

Facebook, Twitter, Google, Airbnb, Kickstarter, WordPress, Pinterest, Flckr, Youtube, Spotify, Amazon, Nest, Gilt, Tripit, Wikipedia, Drudge, and Stumble Upon — sorry the list is pretty dull, but the biggest sites are driving experience, maybe because they are delivering most of it.

4. Wired was very much about privacy and the individual.  Big data is very much a part of all of this right now.  Thoughts?

I hate the fact that all of our life is ending up in databases we have no control over. Especially government databases. Non-government databases I am frankly less scared of. Government databases and intrusion, I guess you could try to curtail, either actively by making your life more opaque to them using technology, or trying to get laws passed — but we already have laws and fat lot of good it does. Profusion of private databases and big data analysis, on the other hand, is pretty much uncontrollable, I figure. In a village, there are no secrets, everyone knows everyone’s business. Well, today we live in the Global Village.

5. Wired used to list Marshall McLuhan on its masthead as “Patron Saint.”  Any new Patron Saints emerging today?

There are a lot of false prophets out there, so I’m not taking that bait. Who said “It would appear that instead of the advertising promoting the product, the product promotes the advertising. But that is not exactly right. Actually, the product promotes the consumer?”  Marshall McLuhan said it in 1995. But wait, Marshall died in 1980. This was Gary Wolf channeling Marshall in an email “interview” we published when I was editing Wired. Who needs another patron saint when you can just channel the original?

6. Give us one word or phrase to describe web advertising these last 20 years and another to describe what it might be in the next 20?

The web marked the “future” — you know, the one model we have in our head, that clean break from the past that will arrive someday, but we can’t say how, we can’t say when, and we can’t say what it will be. We just know it will be so “different” it won’t in any way be like the present.  The past 20 years after HotWired have been “prelude.” And the next 20 will be “prelude.” And then we will again be in the “future” that marks a clean break with life as we know it. (Although we may be there already).

To learn the full story of the birth of our medium, here are links to an article from Fast Company and an incredible podcast from the Internet History Project.

Don’t Be Evil, Revisited.

Like just about every other conscious human, I’m passionately ambivalent about Google these days.  So yesterday’s New York Times Article (“Google to Face Congressional Antitrust Hearing”) caught my eye.   Because while consumers, congress, and the business press like westerns featuring white hats vs. black hats, Google has become the kind of anti-hero that Sam Peckinpah would have loved.

First, the stuff that Congress is starting to notice.  The Times article made comparisons to the long-ago Microsoft anti-trust action.  While that would make the kind of neat storyline (“They’re spiking the search results to favor their own businesses!”) that Congress and Cable news anchors love, this mid-90s melodrama doesn’t play the same anymore.  For one thing, while companies like Yelp may be be crying foul, there are both other search options (seriously) and a behemoth competitor to act as a counterbalance (see “Facebook.”)

The Drift is proudly underwritten this week by PubMatic, which empowers publishers with one holistic platform to sell advertising more intelligently.

This is not to say, however, that both consumers and players in the online advertising ecosystem shouldn’t have very serious concerns about Google’s battle plan for hegemony.  They absolutely should.

Recently at an event hosted by Evidon, I moderated a panel featuring actual civilians — consumers — about issues relating to privacy.  In preparing for the discussion, I pre-interviewed and polled the panelists about their level of paranoia about various companies.  Concern about Google was middling — mostly 3s on a 5 point scale.  But when I later pointed out that Google also owned DoubleClick, one of the principal companies that helped direct the placement of ads on the web, most panelists wanted to restate their scores and raise their level of concern.  How long before consumers start to connect the dots between Google/Click and G-Mail (knows what I write), YouTube (knows what I watch), Android (knows where I am and what I’m searching for locally) and Zagat (knows what I want to eat)?   Does a nation in love with conspiracy theories really just keep blowing kisses to Mountain View?

There’s a corollary agenda of concern for those engaged in online marketing:  the linkage of Google-Adwords-Adsense-YouTube-DoubleClick-Invite Media-Motorola-…??   Are the value of monthly Adsense checks and predictable DART ad deliveries fair compensation for a world in which Google’s control of “the ad stack” is virtually absolute?  Google’s now famous (and famously ironic) watch-phrase “Don’t Be Evil” is irrelevant now.  They are a corporation and corporations for better or worse perpetuate their interests.  And those who would expect government action to level the playing field are living in a fantasy realm.  Google’s hegemony will only be checked by smart companies making active decisions about their own options and choices.  And that’s probably as American and capitalist as it gets.

I will be keynoting two important events next month.  On Thursday, October 6th, you’ll find me kicking off Admonsters’ OPS New York event.  And on Thursday, October 13th I’ll be hosting PubMatic’s AdRevenue 4 Premium Publisher Conference at the Times Center in Manhattan.  I hope that you’ll look into both.