Twitter could unlock the economy of unbundled advertising

The horrible disasters in Japan over the past week have once again proven Twitter’s value as a global news ecosystem. Most of the early information I got about the events came via Twitter, and it continues to grow as THE source during an emergency. Learning (and teaching people) how to follow the news via Twitter is perhaps a greater challenge for future journalists than actually reporting the news. The networks — and even some local TV stations — dispatched anchors to the scene, but this eventually ends up to appear self-serving, when the real reporting is taking place among the eyewitnesses and individual aggregators via Twitter. Its real-time nature genuinely reflects the magnitude of events such as we saw last week in Japan, and that’s hard to ignore, even for those who don’t trust the veracity of the accounts.

Twitter earthquake

The problem for many with Twitter as a news ecosystem is that Twitter is a private company. The problematic nature of this was revealed this week, because the company got into a bunch of hot water with developers over revisions to its Terms of Service (TOS), revisions that put restrictions on people developing using its API. While this only really matters today if you use one of the Twitter clients that’s “offending” Twitter, the ramifications are clear: use a private entity’s API at your own risk, for they can always change the rules. There’s a lot of name-calling going on, but Twitter’s within its rights to do this. It is, however, prompting renewed calls for an open, micro-messaging service not tied to anybody’s servers, and when that happens (Dave Winer’s working on it) Twitter, as we know it, may drift out of favor as a news ecosystem. It’ll take some doing, however, because of the ubiquitous use of Twitter worldwide.

The Twitter brand is strong, and the extent to which it is used by businesses is its strongest, most monetizable advantage, and what I don’t get is why the company doesn’t pursue this instead of trying to manage its use as a news ecosystem. In January of 2006, I published “The Economy of Unbundled Advertising,” which predicted a Twitter-like system for enabling commerce.

But now we’ve entered the world of unbundled media, where people download individual songs instead of buying CDs, watch programs when and where they want (without the commercials), and read news stories or snippets of stories via the World Wide Web instead of going out to the driveway every morning. Movie-going is down; music radio is falling fast; and you can now watch Lost on your Video iPod instead of Wednesday night on ABC. The mass audience is disappearing and with it, and the economy it supports.

If unbundled media is where we’re headed, then unbundled advertising must necessarily follow. This is a scary concept, however, for there is no command and control mechanism or manipulable infrastructure in the unbundled world. The upside, though, is that it costs very little to participate. All that’s necessary is the release what I call “ad pieces” into the seeming chaos of the Internet, where other businesses will take those pieces and reassemble them when summoned by customers who are trading their scarcity for information they actually want.

Ad pieces don’t have to be slick, finished ads. Think of them as parts of a conversation with customers.

What appears to the traditional marketer as the swirling vortex of a black hole is actually a highly efficient machine that sorts and filters based on product, service, price point, location, and a whole host of variables determined by the customer and/or his liaisons with all those pieces — aggregators. In the illustration below, the customer has at least three options in acquiring knowledge: search, dumb aggregators (where aggregation is strictly a software solution) and smart aggregators (where human “editing” enters the picture).

An advertiser can influence positioning with search results by paying for it. This is how Google makes its money, but it’s essentially mass marketing, because the advertiser’s message is placed in front of lots of eyeballs. Similarly, an advertiser could buy positioning in a dumb aggregator. After all, any software can be “instructed” to give precedence to the highest bidder.

But a smart aggregator is a different animal altogether, and it’s here where potential customers will increasingly provide their scarcity while the unbundled media world is exploding. With options expanding exponentially, people will turn to each other (as they always have) for advice on purchasing decisions. New businesses — perhaps subscriber-driven — will flourish based on their ability to cull the wheat from the chaff and meet the needs of their customers. Buying influence here may ultimately be acceptable, but the price tag for the smart aggregator will be transparency, and that may negatively impact customer appeal. In all things Media 2.0, we must never forget that the customer is in complete control.

Twitter is, at core, a notification system. Its software provides the content management system (CMS) that could enable unbundled advertising, and it’s something they could own for themselves while letting everybody else play with the news ecosystem aspects. It may not seem as big or as sexy, but it’s where the money’s at, and if I was advising them, this is where I’d point their energy.

Thousands of businesses already use Twitter as a marketing outlet, so moving them to simply release ad messages into the open Twitter stream is a much easier mission than creating something from scratch that’ll do the same thing. Hey, Twitter, are you listening?

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