It seems that companies use selling advertising slots as a magic bullet for profitability. While advertising certainly boosts a company’s revenues, the greater value a company can provide to advertisers lies not in delivering an audience but in delivering information about the audience.
It is worth considering the incredible array of web services available at no up-front cost: Google organizes the world’s information, which the consumer can easily access at no charge; Facebook provides a way to connect with people throughout the world at no charge; Pandora gives access to a huge catalogue of music at no charge. Consumers accept that by using the service the company will store their information and run advertisements.
Consumers and analysts then expect to see advertisements that pertain to their preferences. Analyst Rich Green put together a complaint to show that Facebook does not use his information to show him interesting ads. Such an expectation demonstrates an opportunity for advertisers, where instead of bothering the consumer they can partner with the consumer: less like a street-hawker and more like a concierge.
Since the current pricing model seems unlikely to change, data about consumers will only increase, particularly if mobile payments gain a stronger presence. To adequately use the new resources, companies will need greater tools:
1) Increased data storage: an enhanced case for cloud computing
2) Increased data analytics software: with so much information, an Excel spreadsheet won’t cut it.
It is possible that consumer data will flood the market and so selling information will no longer provide the same profits. Sites will likely differentiate by the type of information offered. For example, with the “Like” button, Facebook can follow a consumer around the internet; GoogleMaps can show where people go an how they get there.