By far the coolest thing about the press release regarding the Microsoft investment in Facebook recently was the job title of the quoted executive. I am surprised I haven’t noticed anyone else noticing it.
“We are pleased to take our Microsoft partnership to the next level,” said Owen Van Natta, Chief Revenue Officer, Facebook. “We think this expanded relationship will allow Facebook to continue to innovate and grow as a technology leader and major player in social computing, as well as bring relevant advertising to nearly 50 million active users of Facebook.”
Tom Insam aka jerakeen, one of dopplr’s development team said that the he liked the role because it made it clear that making money is somehow a sideline of what Facebook does.
I left it at that until I heard about a new role at one of our clients- which was looking for a revenues officer. These “revenues officers” are fairly commonplace in the consumer web space, but we’re just beginning to see them in more enterprisey contexts. It will be interesting to see how this plays out in 2008. Do you know any ad-supported enterprise businesses hiring people in this kind of role? Arguably the music business just began a substantive move into ad-supported business models with the news EMI plans to look for band sponsors… well sometimes listening to band does make you want an aspirin. will we even see competition for talent between music and IT businesses?
Evidently Radiohead didn’t want to be sponsored by Prozac or something…
Zoli Erdos says:
January 16, 2008 at 7:24 pm
Off-topic, but somehow Dead Air took on a different meaning since yesterday 🙂
Al says:
January 16, 2008 at 8:28 pm
I assume you are talking about enterprise I.T. providers adopting ad-based models (given your tweet).
1) I don’t see how enterprise software can be funded by ad-based models, ads are about diverting attention to something else..
2) Good software/services monopolize attention, engaging the employee, not diverting it, businesses don’t want distractions surely?
How do you see the model working in this case?
regards
Al
Dennis Howlett says:
January 16, 2008 at 8:40 pm
I have an inkling but I’m not telling in case it turns out to be pants 😉
jgovernor says:
January 17, 2008 at 2:57 pm
Zoli- dead air. ha ha ha. you don’t have iFoam?
Al- 1. i think you’re wrong
2. what if the ad is the solution
the model is working. requires lower margins but workable for volume.
Al says:
January 17, 2008 at 5:37 pm
James I am not letting get away with just “what if the ad is the solution”. Can you provide me with a hypothetical example so I get it better please?
regards
Al
Peter Bell says:
February 13, 2008 at 3:18 pm
THis has been touched on already by Al, and its worth expanding the discussion, if only to flush out a debate that is deserving of more attention.
Whilst some software will be paid for by ad revenues I don’t believe that all software will go this way, in fact I doubt that anything other than a small percentage will be purely ad funded. Putting aside privacy, security and other issues there is a huge economic barrier.
Online advertising is pretty simple – is sold on a pay per click basis or per impression basis. In both cases the price paid by the advertising to the publisher is determined for the most part by yield (the % click through) and the market segment (some customers are worth more than others). If very few people click on an ad then the price drops accordingly, and if you’re outside of key verticals like financial products then the prices paid are very low. Consider the scenario – you’re working on client proposal due later that day – your propensity to click on the ad within the software is going to be very low, and even if this is the highly priced financial services or automotive sector if no one clicks one the ad the price will drop, actually if no one clicks on it then you’ll also see the percentage of available ad slots unsold rise as well. It a vicious circle.
If you’re not familiar with the types of rates received for online advertising then they are low. Most display ads are sold on a per impression basis and a lot of the internet inventory is sold for $1-$2 per thousand impressions, less if your small and sell through an ad network. This is a volume game. Compare this with the $50 per license you’d perhaps expect to earn for a useful piece of desktop software then you can see the economic gap if you’re looking to pay the mortgage as a software developer.
Of course here I’m looked at software through a traditional lens – personal & enterprise productivity / automation. Where software is a means to an end – say the the engine powering a media site then things shift, but it is still a volume game, it takes millions of ad impressions to generate a reasonable income.
jgovernor says:
February 14, 2008 at 4:16 pm
bear in mind adwords isn’t the only model in the world. in the right niche with a dedicated ad sales team, the revenue models are intriguing