Personalization and Online-to-Offline, Not "Mobile, Local, Social"

The technology buzzwords of the day are “social, mobile, local“, but personalization and online-offline better describe the broader trends.

Personalization

Personalization technology can be roughly fit into a few groups - targeting, collaborative filtering, social, and customization of creative, although in the real world these are often integrated and inseparable. If the internet started with the contextual and broad-based targeting of the offline world, and then moved to backlink-based search, personalization has long been taking market share from search as the mechanism to drive the online world from advertising to content to commerce (although search itself is becoming ever more personalized than more or less deterministic PageRank-style algorithms). The shift was enabled by the vast and accelerating rate of data online services collect about their users, but it only succeeds because of entrepreneurs who can figure out how to turn this data into information and then to action.

In ad-tech this has taken the form of behavioral, demographic, psychographic, and semantic targeting, in rough chronological order. My recommendation to premium publishers is to create halo and valence data to integrate into ad targeting ASAP to monetize the incremental value of their own brands vs. lower quality sites, and I think this represents an interesting void for ad-tech startups to fill. Collaborative filtering is invading the ad-tech world, with AdKeeper recently telling PaidContent that “The way to understand the ‘good’ ads from the ‘bad’ ones is to let consumers actually come out and tell us what they are.” Social ad-targeting is on everyone’s radar but cultural barriers remain as illustrated by LinkedIn’s misstep with social ads in August. Opt-in social recommendations have been far more successful, primarily in the form of Facebook likes and Twitter mentions, but this is not quite advertising. Personalization of creative is taking ad-tech beyond the question of what product to advertise where and to whom, but also what that ad should look like as the where and to whom vary. Companies such as SundaySky and EyeView customize video creative on the fly on a per-user basis, while Dapper and Tumri do the same for display. 

In content personalization has primarily taken the form of collaborative filtering by companies such as Netflix, Taboola, Outbrain, Sailthru, and nRelate, with some recommendations from the social graph although this again raises privacy issues.

Online commerce is increasingly personalized, with Amazon leading the way in applying collaborative filtering to suggest purchases, and practically every e-commerce site of any scale following in their footsteps. FourSquare is lead the way towards location-based analytics for brick and mortar merchants, while niche sites like BirchBox and Fitocracy can offer incredibly rich data to such mammoth industries as beauty and fitness, respectively.

Online-to-Offline

I have long postulated that online-to-offline is a basic axiom of media, whose appearance in digital media and the mobile web are the natural evolution of these technologies rather than a paradigm shift. Every form of mediated human communication, from the printing press through the telephone to the various incarnations of the internet (Web 1.0, Web 2.0, mobile Web) has been about facilitating and optimizing real world results, rather than some sort of masturbatory self-referential information exchange (jokes about internet pornography aside). As technology matures it ceases to be technology per se but rather becomes just another tool to enable the satisfaction of our eternal human needs: food (Yelp, Menupages, Zagat), shelter (AirBNB, HomeAway, HotelTonight), transportation and navigation (ZipCar, GetAround, Garmin), in-person social interaction (Meetup, Evite, Paperless Post), work (LinkedIn, TheLadders.com, Indeed.com), sex and intimacy (JDate, HowAboutWe, PlentyofFish) and finance (Mint, BankSimple, LearnVest), sports (RunKeeper, Fitocracy, DailyBurn), entertainment (Netflix, Hulu, CollegeHumor), etc. Email and sms are no more intermediated than letters and telegrams, and the technology of previous generations such as airplanes, ATMs, and microwaves were no less wondrous or disruptive when they were launched than the internet, smartphones, and tablets. This concept is neatly summed up by the Alan Kay quote that “Technology is anything invented after you were born. Everything else is just stuff.” It is true that the pace of disruption has accelerated, but I don't believe this represents a discontinuous break with the past.

The long-term trend in the world of digital media products or services – be they apps, software, hardware, etc. – is therefore not determined by feature sets or tech specs but by utility as a tool for solving a real-world problem, defined as effectiveness in creating real-world results with the least real-world effort. The digital media companies that succeed in transforming their “technology” into everyday “stuff” will be those that heed the above. Apple is the pinnacle of this transformation, but there is room for plenty more companies to get this (if they can).

Mobile, rather than distancing people from the real world, makes them more effective in dealing with it. Mobile has taken the utility of media to its natural conclusion, by bringing the media (“online”) to the physical location in which its consumption is most effective ( “offline,” aka “the real world”). Printed guide books and handwritten travel directions are perhaps the original forms of mobile media, but required far more effort while producing far inferior results. Their replacement by digital mobile media was therefore inevitable.