The Media-Application Era Has Arrived

Posted on April 17, 2010 by Tony Uphoff

The first phase of online media was defined by "Reach".Value was based on unique visitor reach and the page views generated. The second phase was defined by "Search", where value was derived by optimizing content to drive search results. We are now officially in the "Media-Application" era, where value is created by engaging audiences around applications of content and services that become part of their regular media consumption. This market transition represents a fundamental shift that is setting off a series of changes that will realign the power base in media, technology and advertising for years to come.

Google served as the center of gravity in the Search driven era of media. While it's not clear yet which company will take that position in the media-application era, Apple is making a strong case. Facebook was really the first scalable media-application that we've seen. Twitter another example, has had a similar explosive growth in adoption. More narrow media-applications are now also gaining traction, like location-based applications FourSquare and Gowalla. All of these examples share common traits; rapid consumer adoption and at the same time, the lack of a clear and scalable revenue model. Most everyone assumes that contextual social graph recommendation advertising and location based advertising, leveraging mobile positioning, will eventually be the way these media-applications make money. As usual Apple has a different approach and perhaps they have hit on the most scalable model of all.

Wait a second, Apple is in the device business not advertising you say? No need to remind you that it wasn't that long ago that people were confused when Apple announced they were getting into the music business. The full scope of Apple's ambition became clear when they announced the iPad and iAd Network and the new OS for the iPhone. With 3G iPhone's and iPads, over 1Billion applications downloaded and growing, the announcement of an ad network makes sense. Apple will now have the ability to put ads into applications, provide location based advertising and provide an interactive and customizable experience with advertising for consumers. And they will provide a platform and network to allow content and marketing application developers of all sorts to build businesses and in turn scale the market.

Make no mistake Google will not be left in the dust here. They have already started testing location based advertising in Google Maps in Australia and they have been working with rich-media advertising applications for awhile now. Remember that little acquisition a few years ago called YouTube? They are approaching $1 Billion in revenue and growing. Google's Android was clearly launched with the future of the application-based media era in mind. And while the application downloads pale in comparison to Apple's iPhone, they recently surpassed the 40,00 mark and say that the Nexus One phone has reached profitability.

So people get ready. The media-application era has officially launched. And as with most market transitions, it represents both threat and opportunity for existing media, marketing and technology businesses.,

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