Fulfilling the Promise Made by the Internet
Nearly all media supported by advertising has typically been characterized by limited supply. One can only cram so many ads into the television program, magazine, newspaper or radio program. In fact, this is true for “ordinary” websites too. Right about now, many of the most popular websites have sold out their banner ad inventory for 2006.
But there is a new medium in town that is capable of side-stepping this supply phenomenon. This is good news for those who buy advertising. Remember back to Econ 101…if supply is no longer fixed, then you don’t get squeezed on pricing. This is also good for those who consume the media that is supported by advertising.
What is this new medium? Virtual worlds. This new medium is uniquely capable of integrating an advertiser’s message into their product, and in so doing, avoid the issue related to supply and inventory.
Consider Whyville.net, the “edu-tainment” virtual world for tweens. Unless you are 8-15 years old, you probably haven’t spent much time visiting this virtual world. But think of it as a virtual theme park. Every advertiser is essentially a new roller coaster or attraction for the virtual world. The site is actually enriched with each advertiser.
Scion opened up a virtual dealership and finance center. Getty put its name on a new museum. Even NASA got into the act by sponsoring the Whyville Aeronautics and Space Administration (that’s right, WASA). Sponsors ranging from Disney and Adobe to the Center for Disease Control and the Woods Hole Oceanographic Institution have sponsored destinations, activities, events, and the like inside Whyville.
Going back to our economic theory, with a virtual world such as Whyville, every advertiser produces incremental inventory (in this case, in the form of new page views). It’s like a new roller coaster opening up in our theme park example. The incremental advertiser creates incremental advertising inventory.
This is great news for the advertiser…but it’s also great news for the consumer of the media.
If every advertiser is a roller coaster, then the relationship between the advertiser and those that consume the media has fundamentally changed. Instead of being a necessary evil that subsidizes the consumer’s out-of-pocket cost, the advertisements enrich the site. Who wouldn’t want one more roller coaster in their favorite theme park?
As stated above, this is good news for the consumer. And at the same time, this is wise approach for advertisers. They side-step a seller’s market situation, and simultaneously put themselves in front of their consumers in a non-intrusive manner.
Could this be the fulfillment of the original promise made by the Internet?
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