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Who pays for Web 2.0?

Posted 05.27.08 by Adrian Ho


A couple of articles on the monetization of content and the monetization of services have caught my eye in the last couple of days, and with the current economic situation I’m guessing there will be lots more discussion in the future. The crux is who will pay when people have grown used to content and services for free?

Right now, the consumer pays for access by paying an ISP, telco or cable company and by buying a computer, phone, PDA, etc. Advertisers are asked to either directly provide or support the other three parts of the ecosystem: content, services and platforms (portals/social networks etc.)

This is a deeply complex issue and I don’t claim to have a solution, but this quote in the FT article is telling:

“Many members of the Web 2.0 generation of internet companies have so far produced little in the way of revenue, despite bringing about some significant changes in online behaviour, according to some of the entrepreneurs and financiers behind the movement.”

I’ve written before that services and software create behaviour change. Additionally, I think services and software can also change human values over time. As these are the ultimate goal of any marketer, it seems to me that advertisers’ money is being spent in the wrong places. If social media and Web 2.0 services are directly changing behaviour then perhaps advertisers should go from simply supporting them to providing them?

A flammable topic I think, what do you think?

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  • Helge Tennø

    Agree completely.

    Why do we think the tools for connecting with our consumers should stay constant when the consumers behaviors and culture are changing?

    Traditional ad formats create value in their comfortable off-line context. On the web we have less time, less interest and demand more relevance. Interruption Marketing is at large the wrong model for adding value and enriching the brand in digital channels to digital consumers.

    Does the root of the problem lie in the way we gather insight? Which to a large extent is through techniques as old and outdated as the ad-formats themselves?

  • Sam

    Hmm, maybe. When I think of advertisers providing web 2.0 services, I think BudTV, and cringe. Advertisers are always set on building a walled garden/prison so you can only buy their products or they’re building a garden that is so unrelated to their product that it adds no real value to the consumer. Consumer products companies need to leverage Web 2.0 to build a meaningful relationship between their consumers and their product, they don’t need to make another YouTube, FaceBook, or Flickr, maybe they can leverage those, but they’ll most likely have to get more creative and build something completely different. In digital it is so easy to copy that people ignore copies really quickly and it also needs to be open.

  • Adrian

    yeah advertisers don’t have a great track record creating services but what if they funded existing ones directly as investors?

    A company like Coca Cola could fund Twitter for $20 million and I think you could create a model to show that it would be a better return on investment than $20 million in trad media.

    If Coke stepped in and helped improve Twitter uptime in return for some (creative and useful) brand integration it would probably be welcomed by many of its users.

    However, I totally agree that brands shouldn’t try to duplicate something that’s already there a la Bud TV. There’s lots of ideas out there – it’s just laziness to copy an existing one.

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