Alterman in Context

"Openness is the yin to Jerry Yang's Yahoo"

Yahoo Reaches Out For Ad Partners

By Jessica Guynn, Los Angeles Times Staff Writer
September 13, 2007

The search firm's deal with Bebo is the latest in its push to sell ads beyond its own sites. Openness is the yin to Jerry Yang's Yahoo. For its first decade, Yahoo Inc. grew by attracting more and more people to its stable of websites. Now, with its co-founder and new chief executive at the helm, it's reaching out to find advertising opportunities elsewhere on the Web.

Yahoo and the other major portals are now all working strategies to place ad inventory on the entire web, not just within their own domains.  Their short-term focus appears to be paying lots of money to sites like Bebo in order to “buy” the right to place ad units.  But doesn't that seem like an expensive, non-scalable way to go in the long run?

I'd like to think that the KickApps platform presents a much more cost effective, long-term model for the way Yahoo (and other portals) might “earn” real estate on 3^rd party websites---by providing those sites a range of media functionality and, in turn, helping them build incremental page impressions. 

In an earlier blog I described all this as an “Open Portal” strategy, the idea being that portals need to open up (distribute) their content and functionality to web publishers if they wish to effectively compete for advertising real estate off their domains.

I'll repeat my favorite analogy:  Think of the way NBC earns the right to insert ads on 3^rd party television stations by providing them television shows.  Imagine if NBC provided only ads to television stations (e.g. no television shows).  Clearly the “adsense model” would not work for television networks and it won’t work indefinitely on the Web.  And so it won’t be long before Google (and others) begin to think about packaging hosted applications with their ad programs to earn publisher loyalty.   In a nutshell, that's what KickApps is all about.

Call it "cloud computing" if you like...

I've used the term "Open Portal" to describe  what I believe to be an inevitable transformation of the web portal business to a model which enables the syndication of programming (both hosted software and traditional content) to 3rd party web publishers.  For Yahoo, MSN, AOL, Google or Ask, there are far more incremental impressions (and ad revenue) to be had distributing user experiences outside their four walls then by building new ones within their respective domains.

It's hard to say who among the the major players will be the first to fully embrace an Open Portal model, but it's coming.   And it must be important because I just read about what's next in the NYTimes. :-)  They may call it "Mash-Ups" and "Cloud Computing", but a rose by any other name...

Anne Eisenberg NYT 9-2-07:  “Now mash-ups are poised to hit the mainstream, and to spread well beyond music. Yahoo, I.B.M., Microsoft and others are creating systems to let ordinary people who’ve never been near a Java class create useful computer applications by combining, or “mashing up,” different online information sources.”

John Markov NYT 9-3-07:  "This week, it plans to turn that strategy upside down, making available free software that connects its Windows operating system to software services delivered on the Internet, a practice increasingly referred to as “cloud” computing. The initiative is part of an effort to connect Windows more seamlessly to a growing array of Internet services."

Old schoolers like NBC, CBS and ABC have had the syndication model figured out for a long time (let's leave aside the issue of ITunes distribution for the moment), and AOL finally did a Gorbachev with their own walls.  But there's still a large gap between clouds, pipes and mash-ups...and an Open Portal architecture that would allow the big players an opportunity to earn real estate across the entire internet by partnering with willing web publishers.