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How to split the pie: Shaping Web3 Advertising market under fair competition
Is there a life after monopoly?
In the last episode, we discussed why there will be no ad giants like Google or Meta in Web3. The primary reason for it—the wide accessibility of rich on-chain data and the lack of control in the hands of a single entity. But this left unanswered a big question—what are we going to see instead? Today, we want to address the elephant in the room.
What defines the desire of a publisher to work with an ad provider? The price it can pay. What defines this price in Web2? Data. Let’s take it out of the equation. What’s next?
1. The size of the network
A wider availability of users and ad campaigns leads to more efficient optimization through finding the most tailored offers for each individual. Same as a network will always be more effective and pay more than a 1:1 partnership, a large network will be more effective than a small network.
But can one really win the network?
The interesting detail of traditional ad tech, is that publishers always have multiple ad providers (ad networks) integrated or even put the impressions out on larger cross-network auctions through SSPs. Simply speaking, for a publisher, it’s always beneficial to have multiple bidders, not only inside the network but even at the network layer, as apart from the obvious competition in price it creates a backup ad source and helps to maximize the revenue from a single user.
As the user sees more and more ads, they exhaust the network’s ad demand, and the price of impressions goes down, so, it makes a financially sound decision for a publisher to sell this user as a fresh new user to another ad provider even if they will show the same ads!
It’s hard to imagine that publishers will suddenly become monogamous in Web3. But they do have a reason to put more traffic into a provider who pays more. Back to our equation, how can anyone pay more, if publishers and advertisers are effectively canceling out on both sides?
2. The answer is in algorithms
When everyone has the same data and the same networks, wins the one who can process that data more efficiently and interpret the user intent better! This includes multiple layers, from wallets analytics and predictive profiling to more traditional ad campaign optimization, user ranking, and audience optimization. In the end, leading to one result—higher CTR that will create more value for advertisers from the same raw traffic and will capture more revenue.
Ed: at times when we don’t see many AI/ML experts in Web3 marketing space, Slise.xyz is in the unique position of being founded by a team led by an ex-Meta AI Researcher who has also built AI startups before 📈
In a conclusion:
the specifics of the advertising market will not allow the formation of mono- or duopoly in the environment with free-flowing data.
We will see a fair distribution of traffic and revenue between multiple strong players with their shares being weighted based on their algorithmic advancement.
Now, it’s time to share your opinion!