Read Original Article Here......A quick history review, if I can call it that, illustrates clearly how the internet has always been the efficiency hall monitor, policing all of the world’s market inefficiencies out of the global economic system one by one. Labor mobility for example was one of the first beneficiaries of Schumpeters Creative Destruction. Further along, sites like Amazon were able to bootstrap to a single niche “vertical” (books), then lateral into other verticals using their massive operating cash flows until now where they are selling almost every product conceivable.
The “mall” experience is now a family or social pastime, but the mall’s commercial relevance has for all intents faded. The reason can be found in the same books that got Amazon to the level of an 800-lb gorilla. Most books I buy “through” Amazon, of which I have probably bought over 2000 and counting, I usually buy from competing online merchants selling the same book at a fraction of Amazon’s price, or at a large enough discount to offset the free shipping offer from Amazon. The fact that it was Amazon that put this merchant’s product up for me to buy at a huge discount has earned my consistent loyalty, and this loyalty allows their network to grow.
This is why Amazon is perfectly content in allowing this to take place through their technology. Their revenue from order fulfillment allows them to also benefit from the wholesale liquidators that often dominate the book business. The core of their technology lies in their ability to recommend products to me that I would never have found or seen while visiting a book store, although visiting the local Barnes & Noble is still one of my favorite things to do. Furthermore, the fulfillment and logistics business allows Amazon to leverage its proprietary behavioral targeting technology. And how did Amazon do it? By discovering the value and defining the concept of behavioral targeting since their first “Amazon Recommends” technology was rolled out, followed by “One Click Ordering”.Web communities such as MySpace and Facebook (and dozens of others popping up everywhere) have brought like-minded people together all over the world into hyper niche verticals that continually optimize themselves through rapid evolution.
From the advertiser’s perspective, each new social networking platform becomes a doorway to whatever psychographic and/or demographic being served by that web site. All the old fuss about “monetizing the social network” is being addressed by technology to deliver contextual ads to site readers. The megapixels on each individual monitor become the billboard for advertisers looking at a very specific form of content, such as a news article, e-book or blog. Advertisers are salivating at the chance for precision guided targeting of the consumer, and although some privacy advocates are making noise, there is not going to be much in the way of behavioral targeting + contextual ads becoming Silicon Valley’s WMD in its attack on Madison Avenue. This new "socialization" of the web brings together multiple niche communities with similar interests. But even though I have a MySpace profile and spend time on the site, it does not necessarily mean that I also like the same things as one of my MySpace friends. “New” media marketing is all about serving highly relevant ads to every single user on the site.
Because it is now possible to serve different ads on the same ad spot at the exact same time, advertisers no longer monopolize a specific time zone or TV network. At any given time, if there are 100,000 unique visitors on a web site, and 10,000 of them are on the same page within that site, one could in theory serve 100,000 different ads from unique advertisers at the exact same time, all of them customized based on the users “web print”. Please continue reading Original Article Here...Brought to you by the global leader in macro analysis. Please visit Investment Capitalist at http://www.investmentcapitalist.com for more tidy tidbits of global macro and capitalistic thinking, in the spirit of Rand and Schumpeter.
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