The Revenue Streams of 2007


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Perilous as it may seem, I will once again mark the EC100 issue with a look ahead to next year's emerging revenue models, which we may well be calling old hat this time next year.

RSS finally came into its own last year, as Google and Yahoo! made it invisible. Now you just "subscribe" to headlines and leave the XML, Atom, and RSS garbage to the dweebs where it belongs. As a result, some B2B trade news sites claim that almost 50% of their overall volume comes from feeds. In the consumer categories, even in those like celebrity not associated with tech-savvy users, the RSS traffic is formidable.

However, having more users coming in via the side door (rather than the home page) may mean that publishers need to rethink their layouts, perhaps even their ad inventory. Every article page must merchandise the rest of the content the way a front page would. Whether RSS feeds themselves monetize as ad vehicles is a call I am not willing to make at this point, but they may start changing how we monetize the site itself.

The mobile revolution will be advertised. Once thought insane because consumers would never, ever tolerate ads on phones, the ad model for mobile content was validated in 2006. In 2007, I believe ad support will be one of the driving forces in getting mobile data services to critical mass. Paying incremental monthly fees for every media brand on a handset is simply unacceptable.

The wireless industry is waking up from the same phony question that occupied the web industry in 1996. Fee or free? The answer is the same now as it was then: People like but don't need mobile content and most will tolerate a banner or interstitial to get it free. The good news is that ad support will help solve the distribution problem by lowering the barriers to try mobile content and provide much-needed marketing support. This is the model that helps content providers get their fair share of a bigger mobile pie. This time next year, almost every U.S. carrier will allow ad-supported content to run somewhere from their deck, and some operators may themselves be running ads on the deck itself.

Ready, Aim, Sell: Targeting, targeting, targeting. Finally, finally, finally! The volumes of registered users are large enough at search and content sites, and ad planners are sophisticated enough now to move internet media buying into that much-delayed era of true targetability. MSN recently launched its adCenter, which allows targeting search ads to audience demographics, day parts, and even recent online history. The behavioral targeting engines like Revenue Science and Tacoda are hot because advertisers now have experience and test cases that prove the effectiveness of pushing relevant ads to people who have shown a prior interest. Geo-targeting, day-parting, and behavioral targeting all give advertisers added efficiencies when they buy online and eliminate wasted impressions. That only increases confidence in and spending with the medium.

The model for selling content by the piece (via archives, single articles, small databases, etc.) dipped out of sight in recent years. I wonder (without predicting, mind you) whether Google's new Checkout feature can be a boon to micro-sales for content providers. This virtual payment solution has a model that is quite favorable to publishers, even if Google isn't aiming it at the content market. If a publisher uses Google's payment system and already buys keywords at the engine, then your own text ads will get a blue cart icon that notifies users they can buy content here in a seamless, secure way. Virtual payment systems have been one of our longest running web dreams. What is interesting about Google Checkout is that it allows for micropayments and it is the first ecommerce solution tied directly to a search engine, which by its nature favors good content.

If most of these emerging revenue models seem to lead back to advertising, that is not by coincidence. It is a seller's market as traditional media budgets became much more fluid this year. Some media buyers deliberately held back print and TV commitments just so they could exploit as-yet-undeclared digital opportunities. On the B2B side, too, budgets are finally following the respective industries online. The challenge now is for publishers to deliver compelling emerging platforms that capture these floating dollars and keep them beyond that first test buy.