On a recent Backwards Gang episode of the Gillmor Gang (hard to tell which one eh?), Jason argues about AdSense being more like Direct Marketing and that it will be the incumbent form of marketing for next few decades. He also touches upon the YouTube/AdSense relationship at his blog
Well, he’s partially right but he’s missing one important part of the recipe.

I agree that AdSense is more like Direct Marketing than advertising and  it’s way more efficient than prior forms af advertising given that it’s pay-per-click.
The important piece of the puzzle that Jason is missing is the quality list, something of a cornerstone for Direct Mail or Email advertising.
A better list is a better open-rate, and a bigger ROI.

The fact that AdSense is only contextual is a shortcoming, and for both Google and the advertisers, making it more efficient will make more money for each respectively.

Despite it being pay-per-click, more click-throughs mean more revenue for both Google and the advertiser.

Where is the quality list in AdSense?

You could argue that it’s in the context of the web page, but this is only superficially true.

To rev things up, or “press on the gas,” as Jason would say, a bit of behavioral targeting needs to be added to the mix.

Get more of these ads in front of people who really want them, or are at a particular point of the buying cycle and your CTRs will go up, and revenue will follow.

This can all work in conjunction with contextual data, but will enhance contextual delivery immensely.

So while I agree with Jason’s prediction that AdSense will dominate for years to come, I think Google must improve upon it, or else risk losing marketshare to a behaviorally enhanced version of adsense that may provide a similar ROI, but in a condensed amount of time, which equates to money.

If Jason thinks that Google will rise to Microsoft levels of dominance in this space, they are going to have to address the quality list or lead, in this case, by the use of behavioral targeting.

I think they will. In fact, I think  it will be an integral part of their Cost-Per-Action experimentation that began when the rumblings about click-fraud were at a peak.

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Frank Gruber points out the impending “move to the edge” for Real Estate listings.

Since classified advertising (especially real estate and jobs) represents the overwhelming bulk of Newspaper’s online revenue, you’ve got to think the picture will only get worse for them in the coming years.

I ask, “How can you simultaneously protect your cash cow, and also innovate sufficiently to become a player in the new marketplace?”

As others have asked, “Are you willing to put yourself out of business before someone else does?”

Are you even recognizing this question yet?

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In the old days, when people still listened to albums, you almost always found yourself liking some of the less popular songs better.

The biggest Allman Bros. fans like the eighteen minute, live “Whipping Post” better than “Ramblin’ Man”, which is available at every diner juke-box in the country.
So when it came time to turn a friend on to that band, you tried to impress them with the  more sophisticated stuff. “Listen to this guitar part. . .”

You might have been more successful introducing them to the “hooks” first.

It seems to me that a lot of Bloggers and Geeks are delving into the “deep cuts.” The world needs to be intoduced to the “hit.”

That’s not necessarily a Technorati 100 blog, by the way. It’s not reach that creates a hit anymore, it’s relationship. The new “hits” are perfect for “me,” not necessarily the whole world.
Search was a hit, because it was immediately understandable and useful to everyone.

A blog about gardening with 100 readers but tailored to my geography, could be a “hit.”

To introduce someone to RSS, you need to help them find their “hit” , not your Swan Song .

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Around six or seven years ago the subject of free site vs. subscriber-based was a big one. Big surprise that I have never waivered from free.

But I just realized how ahead of the game I was back then when I said to one editor, “we may want to charge different rates, because some of the site-users will be causing a drain on us, but others will be contributing. ya know what I mean?”

“No,” she said, which was understandable since we didn’t have forums of any kind at the time.

On a side note, at that time I was pushing for the company to adopt the Arsdigita Community System (see OpenACS ), and I admit that my notion of “paying contributors” was heavily influenced by Philip Greenspun.

Scott Karp seems to be thinking that the time has come to pay the users.

What a great way to promote Citizen Journalism (or whatever you want to call hyper-local-non-journalist-majors-traditional-media-aggregated-content)

For less than one yearly salary (I hope!) a news company could pay for ten local blog posts a day at ten bucks a piece.

10 X 10 X 365 = $36,500

Fifteen bucks if a photo, audio or video is included, of course. ; )
But really, we should just let the bloggers keep all the Google ad money, even though we might be driving traffic, and figure we’ll make it up at a higher level of long term relationship marketing.

In other words, they get the nickle and dimes and we get the gesture and attention data for the big payoff.

Sounds perfectly fair to me.

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So I’m in a meeting with some Newsroom folks and all of Senior Management.

After most everybody laid out their views on where we should take our web strategy and what concerns they had about allowing user-generated content (their new buzzword) they turned to me and said “What do you think?”

I said, “I disagree with most of what has been said here, because it’s mostly based on the false premise that the Web is a publishing medium and it’s not.

(short pause for effect)

It’s a communications medium.”

Some polite nods followed and some quizzical looks.

I continued, “You are speaking as if we are some sort of gatekeepers, but that was only true because we owned a printing press. We controlled the distribution channel.

Now we are on a level playing field. So it’s meaningless when you tell a user that they can’t upload that photo. They don’t care. They’ve already got it up on Flickr. They were doing you a favor.”

Most likely very few people in the room knew what Flickr was, would never ask because of corporate posturing, and never felt compelled to find out later)

So then the discussion leader says, “I think we all on the same page.”

Oh really.

I don’t think so.

You think so because Corporate Central has mandated we embrace user-generated content. I know what that means, even if they don’t truly mean it. If you really want it to be a success, it better damn well mean what I take it to mean. It doesn’t.
What it means in your mind is that we allow others to publish moderated content on our site and play by our rules.
Sorry to burst your bubble, but I don’t think that’s good enough.

Here is the bottom line:

The next generation of News websites that attempt user-generated content will initially attract some users but eventually fail to be compelling enough to retain them in an ever-growing sea of user-control and distribution commoditization.

Over-supply of journalism has been a concept traveling around the blogosphere of late. We certainly know we have an over-supply of information in general. That makes just about anything digital a commodity. And  a commodity is not something to build a business upon.

I’d like to say that relationships are not a commodity and that’s where we should head. It certainly seems where many startups and established players are with the whole social software movement. But relationships too may get commoditized if social networks become fluid and agile.

What can’t be commoditized? Creativity, perhaps. Perhaps not. I’ll guess we eventually land somewhere and just get compensated for our contribution and compensate others for theirs, with no intermediaries. But we have some time before then.

So back to the news.

Perhaps in the next iteration, the news organizations will finally wake up and realize the conversation is happening, and “user-generated content” is not a conversation because it literally bespeaks the fact you don’t consider the user an equal.

Let’s get rid of that buzzword. Let’s get rid of this condescension.

Let’s get it on. [disclosure: I am not Marvin Gaye]

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I was just listening to a BloggerCon session on How to Make Money with Blogs hosted by Doc Searls.

ADDED: I forgot to mention the podcast is available at itconversations.com

Some felt advertising on blogs or in feeds was a viable solution while others like Dave Winer thought that was nickel and dime and missing the bigger opportunity.

I’m against ads in feeds for one reason, at least. The internet shuts off what it doesn’t want, and eventually gets what it wants.

If we haven’t yet learned this from the Music Recording Industry, Tivo etc., then I don’t think we are as far along as I thought.

Put another way, any unwanted or missing feature is an opportunity for another solution that will deliver a service without the unwanted feature or with the wanted feature.

The customer always wins on the web, because there is no scarcity.
So, the paradox works this way:
1. Ads in feeds will only work if users want them.

2. If users want them, they aren’t really ads, but content.

Most businesses use the phone. Most do not make money off phone traffic, ads, or even use it as a way to process an order. They use it to communicate in all kinds of ways.

Blogs will be used to communicate in all kinds of ways. Very few will have a business model tied directly to eyeballs or direct sales.

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