Is Web 2.0 Costing Web Sites Money?
By Jonathan Goodyear
A recent article on http://www.cnn.com reported that the monthly page views served by http://www.MySpace.com in November, 2006 exceeded for the first time those served by http://www.Yahoo.com (http://www.cnn.com/2006/TECH/internet/12/13/myspace.yahoo.ap/index.html). Yahoo offered as an explanation that the more modern AJAX-enabled interfaces that it had recently implemented for many of its applications was significantly reducing the number of distinct page views required to use them. This got me thinking about the impact that several Web 2.0 technologies are having on Web traffic, and, as a byproduct, advertising revenue.
There isn t one single definition for Web 2.0, but Wikipedia offers a pretty good one if you re not intimately familiar with the term (http://www.en.wikipedia.org/wiki/Web_2.0). To summarize, Web 2.0 represents the tools, technologies, and methodologies that are utilized in the modern wave of new and useful Web applications. Typically, Web 2.0 applications emphasize community and/or the integration of multiple disparate sources of information into a single aggregate view (a.k.a. mashups; http://en.wikipedia.org/wiki/Mashup_%28web_application_hybrid%29); sort of like what portals were supposed to do in the dot-com era, only better.
Many free Web sites make their money on online advertising. Two of the methods commonly used are banner advertisements and context-aware text-based ads, like Google AdSense (http://www.google.com/adsense/). Banner advertisement revenue typically increases as the number of page views that a Web site serves increases, because they are usually sold in blocks of 1,000 impressions. In fact, a common strategy that Web sites used in the past to increase ad revenue was to implement methods to artificially create more page views. A few years ago I wrote an article entitled Page View Pirates that exposed several of these strategies, and my distaste for the Web sites that use them (http://www.angrycoder.com/article.aspx?cid=1&y=2001&m=7&d=18).
However, as demonstrated by the CNN article referenced at the beginning of this editorial, today s Web 2.0 applications are taking steps to actually reduce page views. A Web site that implements AJAX streamlines the user experience by making calls to the server and refreshing the data on each page view, instead of requiring multiple page views to accomplish the same task. If you were making money selling blocks of banner impressions, your revenue just went down even though your users are spending the same amount of time on your Web site, potentially looking at your banner ads.
You might be thinking that Google AdSense, with its click-through revenue model, is the answer. It s true that AdSense would resolve the limitations introduced by AJAX-enabled Web sites, but there are other Web 2.0 stumbling blocks to Web site revenue nirvana. For instance, most content-oriented Web sites that rely on online advertising also expose their content via RSS feeds. With the sheer volume of information published to the Web these days, RSS readers have become a very common method of information consumption for many people. Unfortunately, the advertising story for RSS feeds is much more limited than what is available if your reader were actually visiting your Web site. This has led to a lot of Web sites restricting their RSS feeds to simple teaser paragraphs with links to the full content on their Web site, instead of exploring the full potential of RSS.
Another Web 2.0 concept, mashups, can either be a good thing or bad thing for revenue, depending on which side of the equation you re on. If your Web site is a content/service consumer, then you are increasing your site s value to your visitors on the backs of others. As more people flock to your site, your advertising revenue goes up. If you re the content/service producer, then your advertising options may be more limited. If people come to your site directly, you can advertise using any method. However, fewer people are going to come to your site directly, because they can get your content/service via other sites that have useful information from multiple sources. If ad revenue is your source of income, you better make sure that your content is embedded in the output of your content/service. A good example of an embedded advertising mechanism can be found in product reviews on ZDNet, where short advertisement clips are shown prior to each review (http://www.zdnet.com).
Web 2.0 isn t all bad for advertising revenue. It actually opens some new doors. For instance, podcasts and video podcasts can have advertisements embedded in them, and can also be downloaded to portable media devices that increase market penetration. The podcast advertising market is still being fleshed out, so it remains to be seen what overall impact it will have on Web site revenues.
The bottom line is that as Web 2.0 becomes the standard by which Web sites are created, the revenue models that free Web sites employ will need to adapt with it. Embedded advertising in podcasts and video reviews are a sign that this process is already underway. Advertising is definitely getting more and more integrated with Web site content, much like commercials are integrated into television shows.
Older advertising methods will not make as much sense in the new Web economy. As such, different Web metrics will become more important to a Web site s success, and its ability to negotiate more lucrative advertising deals. Raw page views will no longer be a valid indicator (if it ever really was). Web sites that are able to effectively tie in advertising strategies that work with, instead of against, Web 2.0 will be the big winners. Innovation and creativity will be key.
Jonathan Goodyear is president of ASPSOFT (http://www.aspsoft.com), an Internet consulting firm based in Orlando, FL. Jonathan is Microsoft Regional Director for Florida, an ASP.NET MVP, a Microsoft Certified Solution Developer (MCSD), and co-author of ASP.NET 2.0 MVP Hacks (Wrox). Jonathan also is a contributing editor for asp.netPRO. E-mail him at mailto:[email protected] or through his angryCoder eZine at http://www.angryCoder.com.