September 26, 2008

The Strange Case of Dr. User and Mr. Ads

MySpace just came up with a brilliant idea (IMHO):  a new advertising platform to "Promote You". Check it here.
Given the quasi-monopolistic situation of the web-advertisement market, it was key to establish direct relationships with advertisers, to get better returns for the huge inventory held with MySpace.
In fact, this is quite common for most of the big Internet services, which have an in-house department of ads sales, in order to fight Google position as main ads broker.
The original strategy undertaken by MySpace is to sign-up its own users as advertisers.  In this way, MySpace is creating new ads demand, while granting very targeted service to its users/advertisers.
Although in theory everybody, including businesses, could place his ads on MySpace, because of the demographic of MySpace's users, it is more likely that the most active advertisers will be just the most engaged users.  After all, we know that these users are artists, musicians who are already promoting themselves on MySpace.  Now they might enjoy a more powerful tool to do so, and guess what, they will be paying for that.
I think this strategy may represent a partial solution to the shrinking of ads revenue coming from traditional advertisers, namely off-line business.  Not to mention that having a relevant presence in the ads brokering market can surely be beneficial for such a concentrated market.

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