What’s Next? Choose Your Own Ad-venture

With consumer control of their media now a given, Microsoft and other Web publishers are considering whether users will also want a say in the ads they see.

Microsoft is testing features on its Live.com personalization platform that would let users swap ads, and social networking sites are exploring ways to give their users a say over which brands appear with their content pages. In all cases, the goal is to encourage more user engagement, while inching toward a more consumer-driven ad model.

Microsoft has begun focus group tests in nine markets to bundle a variety of consumer-feedback advertising features into Live.com, its platform that allows users to build their own Web experience through news feeds, maps, e-mail and Web search. Among the ad-control features under consideration for Live.com are ones that would let users change ad creative or even the type of advertising on the page.

A visitor served an SUV ad, for instance, would be able to tell Microsoft he was not in the market for a car but is refurbishing a kitchen; the ad system could then show the consumer kitchen-related advertising. Microsoft would then create a feedback loop to brand advertisers through its MSN adCenter platform, much like what search advertisers get through click reports, said Karen Redetzki, an MSN Microsoft product manager.

The features are designed to keep with the changing nature of the Web experience for many users, who are taking active control of the content they receive rather than relying on a programmed experience more common in traditional forms of media, Redetzki added.

“The user experience is changing, and the advertising opportunity needs to change with it,” she said. “It’s much better for the advertiser, because you have these much more relevant ads in a place consumers will want them and expect them.”

However, some industry executives doubt most consumers care enough to customize their advertising and are instead putting their faith in technology to ferret out interest in certain ads. If the targeting technology is doing its job, said Omar Tawakol, an svp at Revenue Science, a Bellevue, Wash.-based behavioral-targeting firm, it should not need consumers to deliberately add their input—something he says indicates shortcomings in the algorithm. “You are what you do, not what you say,” he said. “People through their actions tell a lot more about themselves.”

Redetzki disagrees, and says direct consumer input in the ad experience is critical for both the user and marketer. “We feel like the best information is coming directly from the consumer,” she said.

The most fertile group for consumer-driven ad systems could be social-networking sites, where the user doubles as content creator. Such sites have seen their growth explode in the past year, particularly among young demographics most sought by advertisers. While traffic numbers for sites like MySpace and Facebook have skyrocketed, the advertising dollars have not followed. This is in part because of concerns regarding the riskiness of consumer-generated content, but also because many media planners don’t think social networks, like Web e-mail, are ideal places to grab consumer attention.

“You can’t just slap up an ad,” said Eric Valk Peterson, vp and media director at Omnicom’s Agency.com “You have to approach them differently. You can’t treat the same way you treat iVillage or ESPN.com. There’s a lot to compete with” on the page.

To remedy this, some social networks are considering systems that give users a say in the ads shown on their profile or personal pages. Sites like Sconex, Tagged and one planned by Heavy.com are looking at ways to alter the media model to include consumer direction of ads.

Tagged, a social network for teens, is introducing an ad system in the next two months that will let consumers choose brands to display on their pages, as a show of their identity. In this way, a Juicy Couture fan could identify herself as a brand advocate. While the site will still rely on banner ads for the lion’s share of its ad revenue, CEO Greg Tseng said initiatives like brand tags point to the future ad model for social networks.

Tseng believes this new form of media will rely more on voluntary brand integration rather than the adjacency model used by editorial-driven sites that is borrowed from traditional media.

“I think it will be the beginning of a new form of advertising that will be standard or mainstream a few years from now,” he said.

Similar thinking is underway at Alloy, a New York-based teen media company that earlier this month purchased Sconex, a social network for high-school students. Samantha Skey, svp of strategic marketing at Alloy, plans to turn advertising on Sconex user pages over to the users themselves, letting them choose at registration from a list of sponsors. In return for choosing a sponsor, Alloy wants advertisers to “sponsor” users through tangible rewards, from free ringtones kids can offer friends visiting their page to enhanced IM functionality to invitations to new movie screenings.

“They understand the exchange for free content is they’re going to see some ads,” Skey said, citing Alloy studies of college students. “I feel being aboveboard and allowing them to choose who is underwriting their experience is cool.”

Ultimately, such content creators could not only choose sponsorships but create the ads on their pages and profit from them, said Aaron Cohen, CEO of Bolt.com, a social network centered around content creators. But such a system is likely far off, because the advertising business is still centered on traditional media models, Cohen said. “The advertising industry is structured to buy reach and interesting brand integration strategies,” he said.

Esther Dyson, editor of CNET Networks’ Release 1.0, said experiments with consumer-directed advertising would resonate with some consumers, particularly those already taking an active role in organizing their Web experience. “Some people won’t get it, and other people will,” she said. “Just as you configure our home page, why not configure your browser to get your favorite kind of ads?”