Internet: Your Lego City

… or the story of RSS readers and their future. Follow me for some thoughts that I needed to get out of my head about the internet, main shopping streets, CPM prices, daily news, RSS, RSS Readers, and some ideas about where all of this is leading us.

The internet is more like the world than anything else. Your virtual world in the widest sense and within it you build your own city, your own main street, the places you go to and visit and hang out at.

If you now free your mind and start thinking along those lines, a lot of things are moved to a different light and a lot of opportunities start to materialize as you are looking at analogies and different mental models to describe that world.

Looking out of the window driving through Cologne, where I live, I see fairly little advertisements if I don’t pay too much attention to them. They are next to big intersections, next to my way to where I want to be going and they don’t really cost that much to put it or disturb me.

I recently found a study of CPM prices in germany and here is what it listed:

Cinema: 78,25€

Internet: 19,15€

Daily Paper: 10,72€

Magazine: 8,90€

Radio: 6,68€

TV: 6,58€

Posters: 5,70€

Gasoline pumps (yes that’s possible ;)): 4,50€

I bow my head to the cinema. Of course, I can’t switch the channel there and it is BIG, getting my full attention. Daily papers just have huge volumes and radio is often listened to in a way that you don’t switch around the channels either. For TV it is different, because I switch of the ads more often. Posters, the thing you see in the city, are cheapest and Internet advertising is really expensive in relation to the others! And it annoys me a lot of times and as often argued doesn’t really carry branding messages too well. Oh boy.

But back to the city. When walking around in Cologne I see shops, coffee places, restaurants, museums, hotels, houses where people live in and more. Prime locations in the city are expensive but shops know that if they put themselves up on the main street that they get the crowd and the branding and the sales. The people renting the places clearly know what the place is worth and put the rent up higher in main street.

Still this rent can be seen like a minimum revenue share for the owner of that building as seen from the eyes of the shop owner. If I know my rent will be less than let’s say 10% (and I have no clue!) of the revenue I have, the potential to turn a profit is good. It’s only a quasi revenue share because the house owner doesn’t really want to carry the risk.

Smaller shop owners or those that don’t sell something that a lot of people want, cannot run the risk to rent in the high cost places and will likely go to the back streets. You can’t have a streets with only specialists. The smaller shop owners will be found by word-of-mouth, a search in the yellow pages for specialists, people wandering around or by maybe a small flyer on the main street.

Have you ever gone through one of your main streets though with 6 buildings around you and two of them having nothing but a huge advertisement? I don’t think so. It might be a wonderful branding opportunity to put that up there in christmas week in main street but buy would it be expensive! You would need to rent the entire house. People can only do that with houses that are currently being built and can’t be used as rentable property yet.

On some websites it is even worse. We put big posters up on half the houses in our streets that wouldn’t be rentable for that money as they wouldn’t be profitable and we even wrote pop-up-people that hammer an ad against our faces right in the middle of the street, out of nowhere, unannounced. Nobody would even think about doing that in the main shopping street.

In a sense you can see the street with the houses as a big website or even an aggregation of websites. These sites can then put shops up or allow others to put shops up, charging a fixed fee, or a few per 1000 people walking by (CPM). The “1000 people walking by” thing just isn’t possible to do in real life. But even with the possibility to charge like magazines charge, per 1000 users, web sites cannot charge more than a fair revenue share, be it CPM based on in a real revenue share. They might make more in revenue share but as house owners, they want more control in their business. CPM is just the better thing for websites as it is more controllable. The only way a CPM booking can then go higher than a fair revenue share, is if there is some real branding value attached, but you might also argue that like on the street, this will not be justifiable in cost. The revenue share is already higher than what a good branding price would be. As I said, otherwise we would see building on main street with nothing but a big post on them.

Newspapers are something else, as they are really charging for branding, but they come to me, potentially different ones and the paper aggregates the right content for me. I choose which paper to read based on the transactions costs involved, meaning that I won’t read too many. On the internet the transaction costs are a lot lower, and at this time I go to the content in most cases. I am really one the move, not sitting back and relaxing. There is hence a big different between a newspaper and the internet, or the city as such. It is more of a city and with less transaction costs and the possibility to assemble my city.

Now it gets interesting (finally). Blogs and RSS enable a new phenomenon that puts the user back in control, bringing micro-content to them based on their choosing, meaning the user wins, something favored by our wonderful economy. People set up shops anywhere now and I get to know about them by friends and family and can connect them to my street through RSS, creating my Lego City. People and the big shop owners might be on my street or not and if they are, they can offer shelf space for other corporations, making some money.

The cool thing is that my street (or paper) ends up being a prime suspect for highly targeted advertisement, which doesn’t even have to be contextual. Advertisement has always been about getting me interested in something I didn’t know I was interested in. The readers can target based on categories of things I subscribe to, to the makeup of my street, going a lot deeper than simply contextual advertisement. It is highly targeted because the places I have aggregated cater to a very specific audience and if I chose the coffee house that is hip with designers, they will easily be able to add some Designer wares to their shelf. This is really a push back to niche sites.

And this is where it becomes scary as my Internet City, my Lego City will be my RSS Reader! It is not only my street, but also my daily newspaper. I got there to find out the latest happenings, in my street, through the street paper. As on a street, or a paper though, it is not the coffee shop full of designers that puts the ads there, but the street construction company. They get something like 4€ CPM for their ads but I am in the street a lot. They might even get CPM values around 10€ because my RSS reader is like my daily paper too! (Update: The price in CPM is just re calculated. Most of this would be performance based up to life-time-value placements, but that is another story. For a website, you measure in CPM in the end.) The ads are unobtrusive though and a lot more targeted than the ones in the standard street or the daily paper, as it’s my street, my paper. I hang out there a lot more often too. I suspect that paper ads still have a higher brand value because they are consumed in a more relaxed state and the ads take up more real estate, but I am in a less searching mode than in the city, so I presume the right price would be somewhere in the middle for small unobtrusive brand advertisement. Then of course there will be a lot of different new ideas that emerge to targets different messages on that interactive moving street.

It goes even further though, as in case I saw something some time ago in my street, I will search my RSS reader. When I get up in the morning I will check what’s happening in my street and things not there will become my back streets. I still get there, but only occasionally when I am somehow lured there. The shops, or RSS feeds if you are starting to be annoyed of all this real world talk, will try to get me in their shops. The RSS feeds will be the store front.

This means that the idea that the RSS reader is the new browser is really not taking it far enough, because the browser just allows me to see my street. The RSS reader will allow me to make my street, only giving access to shops that give me their storefront via RSS. The reader will be an immense place of power. It can become the epicenter of my world.

Update : Some more thoughts and clarifications are here.