Tuesday, April 15, 2008

AOL: The Network is the Content, the Network is the Ad

There are two big AOL announcements floating up TechMeme today. Most interesting is the news from Comscore that due to Platform A/Ad.com, AOL leads all major internet companies in reach, touching 9 out of 10 users on the internet.

The second is that AOL has acquired Sphere, Tony Conrad's blog recommendation engine, for about $25m. Since it launched three years ago, Sphere has done a great job of bringing its 'related commentary' widget to the content pages of very large sites like the New York Times, Washington Post, and Time magazine.

These two announcements are related, and I'm surprised that the usual commentators haven't picked up on this yet. The future of the internet is becoming increasingly clear -- it's advertorial, or a blend of commerce and content. In a huge number of cases, the content that users consume - presented either editorially, via search, or via a recommendation - is highly commercial in nature. If you care about gadgets, for instance, Engadget or Sony.com are both great landing sites for your online explorations. Cars? You may go to an enthusiast site, or Porsche.com.

Both content and advertising are best distributed via analytics- and algorithm-driven networks. Sphere is quite simply an algorithmic content redistribution network, and AOL's platform A is a (targeting) algorithm driven advertising network. These are different stripes on the same zebra.

Google, of course, has been experimenting with embedding content such as YouTube videos into its huge AdSense network; and there are a number of very interesting large-scale advertorial networks emerging such as Aggregate Knowledge's Pique. (Disclosure: I am an investor in AK). I will be very interested to see how AOL adds Sphere in to its market-leading network, and to watch how this emergent trend evolves.