What Is Next After Targeted Ads?

Last week I put some food for thoughts related to discovery services (or to be precise - the actual scarcity of them...). Yes, in the post - Pareto, long - tail world we need a new ways to discover products and services.

I think I need to sidetrack a little bit here and explain a few shortcuts:

• Pareto - or The Pareto Principle - to quote Wikipedia: "The Pareto principle (also known as the 80-20 rule, Haddad's Theorem, the law of the vital few and the principle of factor sparsity) states that, for many events, 80% of the effects come from 20% of the causes. Business management thinker Joseph M. Juran suggested the principle and named it after Italian economist Vilfredo Pareto, who observed that 80% of income in Italy went to 20% of the population. It is a common rule of thumb in business; e.g., "80% of your sales comes from 20% of your clients.""
• The Pareto Economy, as referred here, or the economy of hits, means 20% of all goods available (hits) satisfy 80% of the population.
• The Long Tail Principle, introduced by Chris Anderson, is the opposite of tge Pareto Principle. The Long Tail especially holds true in the Internet - related economy, such as digital content. The cost side of digital goods (such as MP3 music) does not depend on the number of items in the catalog (running the iTunes store costs Apple the same, regardless of the number of tracks they offer, an opposite to "physical" music store, where each CD occupies physical shelf space). At the same time the profit generated hugely depends on the number of items offered, as the digital content has potentially global reach.
• So by saying "Long Tail" I mean a very wide catalog of available items. If the catalog is so big, users need more and better "helper" discovery services to find what they like and what they would be willing to pay for.

So coming back to the main thread... What you are looking for (be it music or service or experience...) probably already exists... but (first) you may not be aware it exists for real and (second) you may even not be aware you like it... So what may help you discover new things you like?

One of the answers here are advertisements. We all know them from radio, TV and newspapers. They used to be Pareto - based too. Advertising the hits in static media reaching the mass market. Then came the Internet. And Google started profiling ads. They assumed, for instance, what you read is of interest to you, so by analyzing the web page you have in front of you they can select products and services relevant to you and display their "sponsored links", likely matching your interests. But still... Even the sponsored links, being the most discrete form of Internet ads, are, well... the sponsored links paid by the manufacturers and suppliers who want to market their products. Do you believe them? Not fully and too often I suppose.

On the Internet, what you say about your products matters less... And less... But what really matters is what the others say about your products and services... So dear suppliers, forget your traditional marketing... you are wasting your budget... forget even the adwords... (you thought you were smart, didn't you?). The business of the 21st century is not about marketing and sales anymore. The business of the 21st century is about empathy. Thinking of new products, you have to think of the end users and their experience. Will they be happy? Are they going to recommend your products to their friends? I know this may be difficult to swallow for many successful business leaders. Your marketing and sales forces won't work anymore. Have a bad product or bad service? Improve it or your business will suffer. Many have learned this the hard way. And don't even think of running fake blogs touting your products and posting fake [good] opinions. More than ever you need a good product, and excellent user experience. And then it will sell itself. How? The word will spread. Fast.

And this is how we arrive at the social networks. The reason they attract so much attention (and valuation) is they are perfect vehicles to carry product marketing and sales. In the era of abundance of products and, at the same time, the era of scarcity of good value and user satisfaction, a recommendation from a good friend of mine matters more than even the best advertisement matching my profile. Thanks to the Facebook, Skyrock, Nasza-Klasa and others, I have a multidimensional network of friends. Gadget lovers. Music lovers. Travelers. Sotck market investors. I value their opinion. Almost whatever I buy these days is checked beforehand on Amazon, reading user opinions. There is tremendous value in the user generated content. And the virtual connections between the consumers. The next company able to exploit and monetize this value may become the next Google. Yes, targetted ads are not the last invention affecting the path from the designers and manufacturers to the consumers.