Late October will mark the 25th anniversary of advertising on the Web. Having been part of the team that ushered in those first primitive digital ads in 1994, I'll be using this space in the intervening weeks to explore the fulfillment, failure and future of the web's marketing and social promise. This week, the open web and the walled gardens.
That the Web would ever be a thing with regard to advertising was never a foregone conclusion. At the time Wired Ventures launched the Hotwired site and its dozen hard-coded advertising sponsors in 1994, prevailing wisdom said it was a fool's errand: the real money would bypass the edgy and dangerous web in favor of the existing dial-up BBS (Bulletin Board System) offerings from America Online, CompuServe, Prodigy and the first generation Microsoft Network.
This week's Drift is proudly underwritten by Permutive, the data management platform built for publishers. Permutive enables you to increase your data-driven advertising revenue, whilst keeping user privacy at the heart of its technology. Permutive's customers include BuzzFeed, Business Insider and MailOnline. Learn more here.
With the web now on everyone's phone and digital advertising at more than $100 billion, the sentiment of mid-90s Madison Avenue seems quaint today. But it was in fact based on solid logic. Back then - when the web was nascent and browsing technology mostly experimental - getting a customer online and giving them any kind of consumer experience was a serious moat. AOL's discs and Microsoft's bundling of web connection into its technology seemed like an insurmountable advantage - a wall most publishers and advertisers couldn't imagine breaching.
Look at us now.
Twenty-five years later digital advertising again lives in a world dominated by a handful of walled garden experiences - Google/YouTube, Facebook and the rapidly advancing Amazon. At this point we all know the stats about the consolidation of new revenue flowing to these three. But now the moat that protects their advantage is not about access and consumer experience: it's now based on instant recognition of the consumer (and application of their data) and being one of the first mobile apps touched each day. And while these are formidable advantages and consolidation is a natural and predictable state of affairs, hegemony and permanent domination are just a narrative.
As my wife Sharon and I often say to each other, two things can be true at once.
Most of the money and consumer time can go to the big three and there can be plenty of room and resources for open-web publishers and players to innovate and grow healthy businesses. A handful of massive players can brilliantly anticipate consumer demand and social acceptance and also subsequently overplay their hands, reach a tipping point with consumer privacy and lose the confidence of advertisers. The consumer's digital and commercial life can seem fully tilted toward a triopoly of players and a thousand flowers can bloom.
Now, as then, publishers, advertisers and consumers will exercise choice. Now, as then, great companies will evolve to meet the challenge while yet more will start to take shape. Now, as then, nobody is guaranteed survival or a share of growth. Now, as then, the survivors and winners will not wait passively for government intervention or a shareholder awakening. They will focus intently on what's missing for the consumer and what's not square for the advertiser. Recognizing that incrementalism is the enemy, they will take big swings. And they will build their companies and conduct business as though they'll last 50 years.
They will do as they should, not just as they may.
Subscribe to The Drift
Receive actionable insights and perspective for digital sellers sent directly to your inbox.