By Matthew Rechs, Chief Technology Officer
We at Schematic took note this week of two important developments that could impact the way we match the needs of our clients with those of their customers.
First, an interesting project called Open Social was announced. This initiative is backed by Google and a consortium of their partners, and it promises to provide an open system for the development of applications that leverage the power of social networks.
We also noted with great interest the many media reports that anticipate Google’s as-yet unannounced plans to develop an operating system and application ecosystem for mobile phones.
As different as the mobile and social networking categories are, these developments offer similar potential for Schematic and for our clients. And they represent a trend that we hope to see develop across a range of media including mobile, the Web, and other interactive platforms.
In the mobile space, Schematic and our clients have often been frustrated by the cost and complexity involved in developing a mobile application that will reach a significant percentage of American mobile phone users at a reasonable cost.
Each mobile phone carrier supports a different incompatible platform for application development, and each requires that third-party application developers clear a specific set of hurdles before the applications can be accessed by their customers. Making something that works across the range of phones that a particular carrier supports becomes tremendously expensive, to say nothing of the cost involved in developing an application that works across multiple carriers.
We’d be intrigued by a mobile phone platform that enabled us to reach a range of American consumers regardless of their choice of carrier or phone. A broadly supported standards-based mobile Web browser could achieve this. A new platform based on even simpler technologies like JavaScript and RSS could also be a good fit.
The ecosystem for third-party applications that run in social networking sites like Facebook and MySpace has something in common with the mobile environment.
Facebook and MySpace today offer different and incompatible platforms for third-party applications. Surely each offers some unique value to users and to advertisers. But a fragmented market limits the value to marketers who need to reach the largest possible audience.
What’s more, most popular web destinations today offer no environment for third-party applications at all. Instead they focus on offering a quantity of commodity inventory like banner ads or text insertions.
We expect that major advertisers will allocate increasingly larger portions of their budget to differentiated user experiences like those enabled by application APIs, because those applications will consistently out-perform ads based on commodity inventory (the kind that most people will skip or block if they’re able).
The value in applications, as opposed to advertisements, comes from the opportunity to deliver an advertisement that offers value for both the advertiser and the user.
Some examples: It’s easy to deduce from my LinkedIn profile certain things about my interests. I would probably be more tolerant of messages from the companies that I’m connected to, as opposed to those that I’m not. I’d also enjoy learning which blogs the people I know are visiting or commenting on, and I’d probably be more likely to click on ads from those sites than from others.
I want to read product reviews written by the people I know, and there’s no easy way for me to find those reviews today, even though I would probably be much more likely to buy those products.
Each of these outcomes has value both to marketers and to users, and that value isn’t being captured today.
There will be plenty of coverage in the blogosphere about the features than an open social platform could offer to users. I hope I’ve shed some light on the value this same thing might offer to advertisers — the opportunity to reach consumers with a message that they might actually want to hear.
