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 Monday, October 31, 2005
Are Ads Part of the Value Prop?
posted: 11:55 AM, Oct 31, 2005  

There are at least two things that must happen for ads to shift from a cost of adware to a benefit of it.

Time-shifting – Most of the content online (games, videos, ring tones, music, etc.) is what we call non-commercially relevant meaning there is little or no inherent commercial context to the content. If I’m playing Tetris online, what commercial product or non-profit cause is relevant to that immediate experience? If I’m watching a news clip on the nomination of a Supreme Court justice, does it really make sense to show me an ad for a minivan before I watch the clip? Why not shift the ad experience to a time when the user is shopping, searching or otherwise looking for a product or service? Not only will that increase the relevance of the ad, assuming it’s based on what the user is looking for, but it comes at a time when the user is more likely to actually make a purchase.

If I am planning a 10-year anniversary with my wife, is an ad more likely to be helpful to me while I’m in my car listening to talk radio or while I’m at my desk surfing for travel deals to Hawaii? This concept of time-shifting has been something 180solutions has done for years. Frankly, we’ve taken our lumps for it because it’s not directly tied to the free content that is enabled by it. This is understandable because we as consumers are so used to ads interrupting the very content it enables. But what our advertisers have found is an incredible high conversion rate. Consumers are voting with their credit cards and so far, the voting seems to be accepting of the time-shifted model regardless of what critics deem as reality.

Highly Targeted and Relevant Ads – This probably should have been listed first, because if the ad isn’t relevant and highly targeted, then the timing of that ad is meaningless. Again I point back to the idea of seeing a minivan ad prior to the news clip on a Supreme Court nomination. That is likely not a targeted ad. But it would be a targeted ad if I were searching Google or MSN Search for ‘minivans’ or ‘family vehicles’ or even ‘SUVs’ from a comparative perspective.

Based on feedback from customers and our own internal evaluations we estimate the ads we show our customers are relevant ~60% of the time. This is on par with what consumers get from MSN or Google’s search-based ads. The higher that number gets, and the more comfortable people get with time-shifted advertising, the more our ads will be seen as part of the value equation, not subtractive to it.

We’d love your comments.

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