It's Rishi

Have you ever received an ad that was so relevant to your needs and interests, that you were happy to see it? A Google AdWords ad maybe? Or maybe you saw a discount code for your favorite clothing store? My guess is at some point you have. In fact, a recent study in the UK revealed that 71% of young people surveyed would like to receive advertising messages targeted to their particular interests.

Advertising is everywhere we see. Our brains are trained to automatically ignore much of it. While some ads are so extremely unrelated to our interest that it catches our attention. That’s spam. Yet some minority of ads catch our attention because they’re so interesting as to be highly informative. In this case, the ad is a service to the consumer. Think of it like a continuum where the variable is relevancy.

|min—–RELEVANCY—–max|
|spam———————service|

So what if a publisher served only those ads that were very relevant to each consumer. The consumer is happy. The advertiser is happy because their message is reaching exactly those consumers who are likely to act on that message. Publishers are thrilled because they’re making money by very efficiently connecting advertisers with consumers. Win-Win-Win.

Of course, this “perfect” targeting is the holy grail. It doesn’t really exist in any sort of mass scale. But, what if I told you that a company in the UK is so good at doing this that they claim to generate enough ad-based revenue to pay for your cell phone & service? In fact, that company is Blyk. Blyk offers teenagers and young adults in the UK a phone, and service for free. The recipient agrees to receive occasional ads. About a year ago (the service was quite new back then), they claimed 29% average response rate to ads. How do they get such high response rates?

Well, in a sense, Blyk lets its customers control the ads they receive. Customers might receive texts along the lines of:

Are you a UFC fan? [*Y/*N]

XBox360 or PS3? [*X/*P]

Want to hear a sneak peak of the new Radiohead album? [*Y/*N]?

Essentially, Blyk polls the customer to learn about their preferences. They

1) Send a text with content that encourages a simple call to action (“Watch UFC?”)
2) Based on this primary data, they send an ad in the future (“Check out UFC 49 this weekend. $20 on PPV… Call now to order!”).

Blyk’s advertisers and customers are happy. Everybody wins, especially Blyk.

Let’s think about how this might work for a site like Facebook. On Facebook, users are already expressing their interests in a variety of areas. They do this not just statically on their profiles, but constantly via the other social interactions like fan pages, groups, status updates, wall posts, etc, etc.. Fan pages and groups are useful data points but mining user-created content is extremely challenging.

I think a Blyk-inspired system could work on Facebook. I’m curious to know the response rate of the existing Facebook Polls feature. If it’s even somewhat high, and since it’s in the feed I have a hunch it is, Facebook could very easily start to poll users for the purpose of collecting high quality data that makes sense to advertisers. Or, as is suggested in this Telegraph article today (the story is now being denied by Facebook PR), advertisers themselves could poll users via Facebook. Facebook wins two ways. First they earn revenue from the advertiser to run the poll. Secondly, Facebook can charge a very nice premium for enabling advertisers to then deliver ads to specific sets of users (based on their answers to prior polling).

If Facebook executes this well, this may actually improve the user experience. Instead of Facebook being increasingly cluttered with spammy ads, Facebook could serve fewer ads that are, referring back to our earlier continuum, so relevant to the user that the user is happy to see them. Moreover, from a revenue perspective, the rate they could charge for serving a single highly-targeted ad earns orders of magnitude more money than serving hundreds of garbage remnant inventory ads.

Sounds like a plan to me?? Opinions?