punctuative! by Matt Winn

Umair’s recent post got me thinking. In a nutshell, he claims that B2B media infrastructure investments (the kind Denuo, a consulting and investment company newly formed by Publicis, and a story of its own) hold less value potential than the consumer-facing content distribution and community sites that Fox has been acquiring. It’s a difficult point to argue. Through both distributors and infrastructure providers, we’ll likely see more winners on the “attention and interaction” side of the value chain in the near-term given the opportunities. Gaming and the youth market have received the brunt of coverage, but a parenting community site, a baby boomer social networking company, a “self-improvement” content aggregator, and others will succeed in a variety of verticals as many-to-many Internet utilization (beyond “browsing” and information retrieval) becomes more mainstream.

Many of these companies are in nascent stages today, and they’re trying to figure out their business model. “Tonnage” Google and Overture advertising just can’t make for big business (note Jason Calacanis’ Weblogs, Inc. hit a $1+ million revenue run rate via Google AdSense two months before the comapany’s sale to AOL, when it was announced the network delivered 30 million page views per month - see here for revenue numbers and here for traffic numbers). These media companies have to reach a certain critical mass before they can bring in a $120k base/year salesperson in New York to do direct ad sales to major brands (not because they couldn’t afford the salesperson - that’s what financing is for - but because it’s not worth it for the brands to do the diligence on the ad spot if it’s not big enough). Most of these companies won’t hit that critical mass, but will have a loyal user base, and steady traffic but not gangbuster, and they can’t charge for their content without alienating the majority of their users. That business model doesn’t look good. So here’s where the new B2B guys fit in: as business model enablers.

Umair writes that Google is much more akin to a MySpace (consumer-facing user-generated content aggregator and distributor) than a Brightcove or Lightningcast (B2B media infrastructure providers) in the sense that Google allocates attention “hyperefficiently.” Perhaps. Let’s remember, though, that it was not that long ago - April 2003 - when Google bought one of these B2B media infrastructure providers, a company called Applied Semantics with content targeting technology, to power its now famed AdSense program. Maybe Brightcove and Lightningcast aren’t the best examples of “hyperefficient attention allocation” (that doesn’t mean they won’t be tomorrow). Today, we’re seeing a number of other B2B infrastructure providers building off AdSense’s success, and attempting to deliver better advertising returns. Companies like Chitika (”eMiniMalls”), AdBrite, and Federated Media. Chitika is a fantastic example of “attention allocation” as a new entrant that generates a blog widget to display graphical product ads relevant to page content:

How long will it be before a Riya-like upstart creates a tool for in-photo product recognition to display content-relevant advertising next to un-tagged/captioned photos? My guess is it won’t be long, and there will be real value there. Infrastructure and attention need not be disparate.