While preparing for a panel at Ad:Tech last week, our panel moderator Steve Rubel sent some questions, and one of the questions raised an observation near and dear to my heart: the fragmentation of the content experience on the Internet, the proverbial rise of "the long tail".
First, here's the stat: a Nielsen study revealed the average Internet user in the US views 115 different web sites and 2,200 page views. That's 115 different sources of media, commerce or community, and 74 page views per day! For those that don't work online, that volume may seem hard to believe. However, for those of us who do, it seems very low. Either way, measurement services like Nielsen or comScore attempt to measure the universe, so there are outliers on either side pulling the average up or down, and let's simply assume 115 and 2,200 are good.
Harken back to pre-Internet days, and consider how many newspapers and magazines you read per month. I bet voracious readers consumed about 10-20 sources, but the average was most likely 5-10 (fyi, I'm voracious, so I'm extapolating my own usage). Then consider the first 6-8 years of the Internet. You probably used 1-2 portals, a handful of vertical content commerce sites, and then a dozen or so random visits to curiousities forwarded by friends.
Then search happened. Then blogging and other easy forms of self-publishing. And voila: fragmentation explodes. And today, instead of going to 10-20 sites, we're literally all over the place, visiting dozens of sites per day (I visit at least 25 different sites per day myself).
Another friend rececntly showed me Google Trends charts of about 25 of the most prominent sites and media properties over the past 10 years -- these were the big guys, but I'll refrain from singling any out. From 1999 to 2007, their traffic uniformly grows. But about 2007, they all plateau, and then begin to trend DOWNWARD. Uniformly downward. These across-the-board declines are also coming at a time when those same properties are investing more than ever to create great content and experiences.
So what's happening? The short and simple answer is that pesky fragmentation thing. 115 sites per month per user. There a a variety of factors driving fragmentation: search has become the new nav bar; the rise of self-publishing making it easy to create great content has proliferated choice; and web personalization where users can create their own web experience via widgets and RSS.
What does this mean for the online ad business and marketers? This is once again one of those answers that deserves an entire post, but here's the short story. While people claim there are too many ad networks (and they may be right!), ad networks in general aren't going anywhere anytime soon. Ad networks serve the vital function of making sense of this fragmentation and creating an easy media package for marketers to buy. Some say that ad exchanges will hurt the ad networks, and to some degree that's true. However, I believe that ad networks and ad exchanges will become dependent on each other.
Ad networks will create both buy side and sell side liquidity that make ad exchanges viable, and will also continue to serve the important role of simplification intermediary to marketers. Can you imagine a media planner going into an exchange and buying 115 different media properties...for every campaign...and every client? That's not happening; in fact, most agencies are trying to reduce the number of media sources they buy. On the flip side, ad networks are increasinly becoming more dependent on ad exchanges, as they're awash in inventory on the supply side, and their agency clients continue to ask for more targeted and far-reaching media on the buy side. The networks need exchanges for this.
I've simplified this for the sake of exposition (and ignored direct user-targeting scenarios that exchanges will thrive on), but this is the heart of it. The real point here is that fragmentation of the online media experience presents both a big challenge and opportunity for everyone -- consumers, publishers, marketers and all the intermediaries who serve each.