Sunday, February 15, 2015

Closing Open Networks

Significant number of current digital marketing platforms have been built as open networks that have no barriers (e.g., facebook, pintrest, and twitter). They have relied on links, references, and affiliate networks to increase traffic to their sites. As a result, users with large number of followers were able to monitize their accounts and earn large paychecks from middle man. This was great for the users but hurt the companies while they were trying to figure out how to earn money from the billions of users.

As the pressure from investors increased to show a profit and these companies started thinking about going public it was no longer in their best interest to keep these networks open and let other make the money from their users. They started developing their own advertising platforms and affiliate networks. As these networks grow larger they will continue pushing out the middlemen that were piggybacking on their networks. These companies can afford to do that, since in the end they own the customer experience.

The question that arises is that what will the industry and as a result digital marketing look like as these companies become oligopolies and more importantly what will happen to innovation.

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