The Future: People Networks.

We’ve seen the online world change a lot over the past 15 years. We’ve seen several shifts in the key battlegrounds for control of the value generated by consumers’ use of online services.

Throughout the ’90s, it was all about the pipes. Access was the watchword and the business was all about providing consumers with the “pipe” to access online services. Advertising was not a big part of the picture, though charging “slotting fees” to sponsors was a big business.

By the end of the ’90s, with the Web finally displacing proprietary online services, the battle shifted to building and owning the largest portals. Aggregation was the watchword, and the business was all about amassing the most users on gateway pages providing news, information and entertainment. Advertising moved into the foreground, and the value in business shifted from sponsorship and position to a heavy focus on delivering tonnage. Raw scale was the name of the game.

Once again, we’re in the middle of another major change, and it’s going to be just as significant as the shift from pipes to portals.

The big trends over the past two years have been about networks: the extraordinary explosion of consumer usage of social networks, and the very significant shift in online ad spend to the ad networks. While some may disagree, I think that these two trends are ultimately about the same thing, and it’s not just the search-accelerated audience fragmentation away from portals to vertical and niche sites. To me, it’s all about the growing role of “people networks.”

Ultimately, social networks and ad networks are very similar creatures. Social networks use dynamic pages to orbit users with content, applications and communications that are relevant to their social relationship. Ad networks use the dynamic delivery of ads on many different pages to orbit users with commercial content, applications and communications that are relevant –hopefully — to their needs or interests. In the end, they are both people-centric networks. Of course, while social networks today are largely destination-based, unlike ad networks that are fully distributed, that is likely to change quite rapidly. Facebook has already announced that they will soon permit users to take Facebook social tools and experiences and elements of their “social graph” to whatever pages they want. Between that announcement and the OpenSocial movement to create interoperable social communication between sites and networks, social networks will soon be as distributed as ad networks.

Thus, it will soon be all about people networks. In that world, we may not see much difference or distinction between widgets and rich media ads, or ad targeting and content targeting, or between a behavioral segment and a social segment. Further, there is no reason to think that this will be limited to online social and advertising applications. Content and commerce and communication as well will shift to people-centric networks. They will become much less portal-like or destination-centric and more network-like, and fully distributed wherever people are.

People networks will create a number of new challenges and opportunities for the providers of content, commerce and communication. Among other things, networks will create incremental value less from adding “sticky” services to their pages to try to make users stay put, than from leveraging the usage and the people-centric data to deliver more value in their core services — and to seamlessly link those users out to other relevant services when and where they need them, even if they didn’t know that they did.

The portal to people network transition will be a very good one for users, just as the pipe to portal one was. It will be all about them, not all about publishing pages. Of course, the portal business won’t go away, any more than the pipe business did after the shift ten years ago. These two businesses will continue to survive, but they will have a different and less significant role in value creation in the online marketplace. What do you think?

By Dave Morgan
Dave Morgan is Executive Vice President, Global Advertising Strategy, for AOL, LLC.
Courtesy of http://www.mediapost.com

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