Advertising Revenue and Distributions on the Steem Blockchain
Why would we need or want advertising on Steemit? Why would the Steem blockchain need revenues?
Relying on the next buyer of your token isn’t a long-term strategy. It’s essentially a Ponzi scheme – without the accompanying lies about business profits from revenue generation. If revenues can be made and even distributed to holders of a token, then why not take the appropriate steps to make it happen? Diverting from the typical cryptocurrency concept of “buy now because it might be worth more later” is a welcomed move, in my opinion.
Having the ability to actually receive passive returns on investment (in the form of dividends), other than simply from price increases, can bring a lot more attention and attract more “smart” investment into a crypto token. So, how do we get there?
Advertisements, of course.
I know, I know...I’ve heard it all since I joined Steemit last summer.
Advertising is bad and will ruin Steemit. It will make the platform unattractive. It will lead to data collection and other terrible things.
I’m not convinced of any of that and there’s no reason why we can’t have advertising and a good user experience where control is retained by the individual user. There are many ways that advertising can play out in the Steem ecosystem, so let’s dive right in.
Account Creation and Investment
Any individual or company can make a one-time investment ($500,000, $1 million, $5 million) and use that to “promote” their own advertisements in the form of blog posts (Steemit), images (Steepshot), links and short messages (Zappl), and any other app built on the Steem blockchain.
Instead of a one-time advertising campaign where the funds are spent and gone, these individuals and companies can make continuous posts and use their own influence and following to not only be seen on the platform on various “hot” or “trending” pages, but they also have the potential to earn profits for doing so. The slogan that targets companies could be: Get paid to advertise!
This option would be a direct investment into their own brand’s/company’s presence/marketing. Imagine a company like Samsung investing in 10 million STEEM Power so that they can produce marketing/advertising content on their own blog, have their followers read, comment, and re-post it, and then actually earn profits from the rewards gained on that post. Then imagine dozens or hundreds of companies doing the same.
Auction Blocks for Premium Advertising
For exclusive advertising on Steemit, there can be a daily auction for a 24-hour block of premium ad space for the auction winner. Instead of a gaudy, flashing neon banner image, the pages would simply display the normal thumbnail and tagline for a post created by the auction winner for that ad block.
The 24-hour auction could begin at 0:00 UTC and conclude at 23:59 each day. It could be followed by a 72-hour period for post development, then the post would need to be submitted for the ad space.
The Steemit ad spaces would include a featured post on the welcome page and the top of the new, hot, trending, and promoted pages.
The revenue generated from the advertisement auctions could be distributed to all Steem accounts based on Mvests. There could also be an opt-in or opt-out setting for seeing those ads – with those who opt in receiving the distributions and those who opt out not receiving them. Visitors (non-users) would not have the option. They would need to sign up in order to opt out. This would create incentives for either option: Sign up to opt out of seeing the advertisements or sign up to earn from the distributions...and buy/power up STEEM to earn more.
Imagine a company like Pepsi purchasing ad blocks with STEEM or SBDs and then actually using those currencies to purchase premium ad spaces. The revenue is then collected via the daily auction and distributed to stakeholders every day. This creates demand for the Steem currencies, provides an on-chain use for them, provides more utility for STEEM Power, and provides an opportunity for passive return on investment for stakeholders.
Auction Blocks for Targeted Advertising
These would be tag-specific ads that could appear at the top of each page under specific tag searches, such as photography, food, or travel.
A company like Canon, Nikon, or Sony could bid on ad spaces in a similar fashion to the premium ads, but their posts would be displayed only under the tags on which they bid. If Canon were to win the auction block for photography, then their submitted post would be at the top of the new, hot, trending, and promoted pages only under “photography.”
In addition to the tag’s main pages, there could also be a link with thumbnail embedded in every post using the “photography” tag. The same opt-in and opt-out rules would apply for in-post ads. Users would have the option of not displaying or seeing those ads and would either receive or not receive the distributions from the auction, while non-users would not have the option.
Incentivizing the opt-in would very likely result in more people choosing that option, thus making advertising more attractive for the advertising individuals or businesses, which in turn could boost demand for the Steem currencies from companies and individual investors alike. Those users who do not wish to see ads on the platform would still have the option to not see them.
Buying Ad Space on Individual User Posts
This would be the most direct, traffic-based advertising strategy where the user essentially has full control over whether they want their readers to see ads or not. Many successful users on YouTube have had companies/advertisers come to them to either create videos to promote their product or to embed their ads on a specific user’s video/page. The same type of popularity/traffic-based advertising can occur on Steemit, with direct payments from companies to individual bloggers.
The details for this type of advertising would be worked out directly between the two parties and readers would likely not have the ability to opt out of seeing the ads displayed in the posts.
All of these options would also result in an entirely new set of data and analytics – more apps or businesses that can be built and monetized, such as premium analytical services for marketers and advertisers. And all of it would be non-intrusive.
Will Companies Invest and Advertise...and What Should We Do?
Whether or not companies will invest into a cryptocurrency-based social media platform and advertise on it remains to be seen, but I believe that – if the user base grows large enough – the potential audience reach would become harder and harder to pass up. If there are millions of active users and many more millions of visitors to the sites, there will surely be people wanting to capitalize on the audience and we as users would be crazy to continue to oppose monetization via advertising if revenues can be made and shared among stakeholders.
Even if you are vehemently opposed to any and all advertising, you can still have the option to not view the ads. But even if you choose to not view the direct advertisements, you’re still going to see some form of marketing and advertising within posts over time. It’s inevitable. It’s unavoidable.
If there is an opportunity to create a revenue model via the blockchain and if there is an opportunity to share that revenue with investors/stakeholders via the blockchain, then that opportunity ought to be seized. The Steem blockchain is a zero-fee transaction network. There are no built-in revenue mechanisms. The currency is only guaranteed to flow out of the system. That’s not sustainable without new buyers constantly flooding in. Rather than rely on the Ponzi-like concept, we should find ways to monetize what can be relatively easily monetized, as many social media platforms have already demonstrated.
Notwithstanding everything mentioned above, a larger audience will likely require a much better flagship interface and complementary apps. But we can save that conversation for another time.
What are your thoughts on this? Are these advertising and distribution options feasible via the blockchain and interfaces? Should advertising revenues and distributions be part of Steem/Steemit? Should stakeholders benefit from monetization of the platforms?
Follow me: @ats-david
@ats-david this is an amzing post hence you earned 100% upvote and a solid follow from me. I agree 100% that we should think strategically on how to add revenue options to steemit in order not to depend on new sign ups AKA Pyramid or Ponzi scheme.
External revenue like advertising will be the best option however it has to be done right in order not to destroy the concept of steemit. Moreover , companies will have interest to advertise in our platform when we reach 1M + active users which is achievable if there is investment in promoting steemit around the world and elimination of sign up waiting time.
Very good idea @ats-david which should be done with design thinking startegy and implemented .
100% agree. For Steem to succeed in the long run, there has to be a revenue stream from somewhere.
Great, I agree. Win Win for all.
And, if we really want to keep comparing ourselves to facebook.. well.. facebook has ads.. facebook makes money... facebook distributes value to stakeholders...
Steemit needs ads.
Yes.
No it's not. Facebook has investors and businesses/advertisers that all make money. So far, we have basically heard that revenue generation around here isn't a good idea or isn't necessary.
This place won't even kill Medium, 4chan, or Reddit, let alone Facebook.
Exactly... plus if Steemit were to implement this, we would truly be the first - that I know of - decentralized revenue producing organization on the planet.
until then... we're a neat toy, admittedly really cool toy. But as such, it will only be toy money compared to facebook.
I have nothing against ads but hopefully this will still be avoided
if ads come in here the other social media shall die
IMHO
It definitely will lead to that !
This is a blockchain. The data is readily available.
Agreed
Adds can be added smartly as indicated by @ats-david in this post ...I wonder if those responsible will see this post and at least start the discussion
We second that this post was very informative. It discusses some very good ideas in terms of Advertising on Steemit and ALL Steem Powered Applications. We just followed and upvoted with 100% Steem Power.
I agree, good point.
If the whole project is NOT a Ponzi scheme, then there has to be long-term plan to monetize via advertising.
Need to make sure we keep enough minnows around and growth going, to make the platform interesting to the big league advertisers.
By the way, we already have a major advertiser on the platform, grabbing trending spots, etc. Vacation Rentals from bookingtime is clearly a corporate account.
Upvoted and followed
Something like this setup is HIGHLY preferable to Google Adsense and pop-unders.
Being proactive and adding value before its needed is smart.
Well...after speaking with Ned tonight, it won't be happening. So, disregard the ideas...at least for the Steemit interface.
This is a shame to hear, the idea seems really great in a long-term perspective. I read through your whole post and, even though I generally dislike ads, I find this concept to be wonderful. It's logical and creates synergy between all parties.
Are you able to share why Ned shot it down? Was it a "not now" or a "definitely never going to happen" kind of response?
It was more like, "Gold doesn't have revenue," "Speculation is better than revenues," and, "Why would we do that for our users?"
There was also a bit of "this idea may be ahead of its time." And to that I say:
That's innovation!
Hello @ats-david, I hope you will read this comment. I completely agree with the fact that Steem is designed to only let money out of the system. And this will become unsustainable as soon as the system stops growing.
Ads are of course THE solution to this problem, and I must insist, the only solution. This is why I loved your post because it really forsees what will happen in the future.
However, I would like to add a twist. If we follow your model, then every stakeholder in steem will be exactly like a shareholder in Youtube, and we will fall in the exact same pitfalls with monetization that Youtube has. This is already better than the current system on steem, but I think we could do better.
I see two options in front of us:
1- We follow your model where people can choose whether they see ads or not. Obviously people need to be incentivized to watch ads. Now my proposition is that 50% of the total ad revenue generated by the Steem ecosystem will be split between the users that opt to watch ads. Only 50%. Here comes the twist: The other 50% will constitute the rewards pool on steem! Instead of creating new steem with every upvote and taking money out of the system through inflation, let's create the newly distributed steem tokens by paying for it with add revenues.
Now this brings me to the second option we have:
2- Let's just make adds mandatory to watch for everyone! This will obviously maximise add revenues for steem, and we won't need to pay back dividends to stake holders for watching ads.
Why is this good? Because now, we can just create a rewards pool out of this ad revenue. Every upvote on steemit will give money to the content creator and curator, and instead of having this money created through inflation, this money will simply come from ad revenues.
I think both systems are awesome because they allow the steem ecosystem to stay as it is, by which I mean that the content is rewarded by people upvoting and not by the total number of views.
wow such a great idea. Ad revenue could help fund the reward pool, increasing reward for everyone
I fully agree that advertisement can be implemented in ways the user will actually 100% accept it, and I mean 100%, all the users!
You make some interesting proposals for advertisement, something we shall further think about what the best methods are. Without telling to much, I have a method that 1) gives 100% control on push messages to the user 2) higher value to the brands of each user it likes to target 3) none intrusive to the users 4) includes fiat currency revenues. I do believe in a model without any ads in our HOME channels, HOT or NEW channels. I do believe in no ads in post or comments, since the sender may want it, but the receiver not. Now, when it is receiver based, then in post ads may work, but the sender may not want to have some ad in its post (dynamic per reader) or may not want to have some brands associated with him/herself. But a solution could be created for that, bit complex to manage, but still, a solution can be created. My concept (yes, concept since I wrote a whitepaper for that already years ago for some particular service that I never took further due to getting side tracked and drawn into other things). I can tell you, the concept I've developed could fit Steemit perfectly. I need developers to create is, when I would have them, then I would already work on it. So, any time you or anybody who reads this and says: lets to business, get in touch with me and lets talk business.
an excellent post, @ats-david. I've often discussed this very idea of monetizing this site with my son who is a very successful internet marketer. His view is that companies are concerned with brand image - several companies defected from Facebook over this very issue. The very essence of steemit is free speech and the ability to express even highly controversial opinions - not to mention the pornographers that have come onto the site, muted or not. It's a concern for a corporation to have their brand image tarnished by being associated with activity that pushes some boundaries.
I think your suggestions are practical and do-able, but some elements of steemit might need to be re-engineered to make it attractive to a corporation that not only cares about profit, but their corporate image.
A thought-provoking post!
Yeah, that's true. But it's something that every platform has to deal with. We might not get companies like Disney or Gerber wanting to advertise on the sites, but there will be plenty of others who have no problem with it.
I think the bigger obstacle would be getting them to use a site that requires the purchase and sale of a cryptocurrency - because of the various tax laws. That's the single largest impediment to growth around here, in my opinion. Trying to figure out different laws and tax/regulatory compliance has slowed my own business plans for this platform, in addition to working with people internationally.
So many laws...and changing laws...so little time.
This is an excellent idea and needs to happen long term for sure if not earlier...
Thank you for an excellent post, I think this is a conversation we should be having.
I think we will get advertising whether we promote it or not. (I don't think promoting it would be a terrible idea though)
I wrote about how it could develop even without development.
"The more people who gather here the more an economy will naturally happen - Here is an imaginary situation
At some point, Coke or Pepsi or another large company may purchase some Steem and create an account. (we aren't there yet)
Based on other Internet business models, my guess is they would get people to interact with their account by giving away sweepstakes, free services or products.
Some people on SteemIt will be upset about large corporations joining and will try to flag those companies.
This may work for a while, but if current users keep flagging, and there are enough eyes here to motivate Coke, they will buy into the "Stake Based System". (They could even buy enough stake to vote for their own witnesses)
Many users may become angry and leave, so Coke has to be careful to retain the "eyes" if they want their purchase to provide returns in name recognition or sales.
It is all a balancing act
Whether you think it is a good thing or a bad thing, the more eyes we have on SteemIt, the more value and potential it will gain from creative, motivated people."
In my opinion, it is all about getting and keeping "Eyes" on the platform. If that happens the rest will follow.
I think there are many things we could do to improve and shorten the timeframe, and you mentioned some of them in your post. It will be interesting to see how the site develops.
In a sense there already is advertising, but it is built into the system and not really sustainable in my opinion. I see people use their steam dollars to advertise on the promotions tab, but it only cost like 50 bucks in sbd to have your post in the top 10 usually, and those posts make way more than that. There isn't enough sbd actually being used for these things to make it worth while, also it only really enriches the richer earlier steemians who were here first.
While you may put some money into the system itself to advertise, unless a ton of whales or dolphins upvote your post, only a few hundred people or a thousand will see it is the down side. To spend 50 dollars ona post only a few thousand see is pretty expensive if it does not getthe upvotes, which a lot of them also don't because it is new people with almost no following. Especially if the whole point is to get people to click into your site and buy a product. Steemit is not advertising friendly for getting views, for example on reddit it is quite literally 10 dollars for 50,000 views and you can get between 100 to 1,000 clicks yto your site(much better return)
We need more normal regular poeple here first for the views before the advertisers can come in, but i think we are all on our way. Isee a lot of new accounts lately.
The promotion was an attempt at that and many accounts are also using their "posts" to advertise". For example randowhale, booster, whaleshares. Many of the "Give-Aways" are also a form of advertising.
I keep watching for people who sell Mary Kay or some type of product to post, to see how it goes. :)
It is a challenging balance for the community to try to retain new users.
The promotion section is a nice idea, but having it separated in that tab just kind of prevents it from getting views. Better implementation of it could potentially be a nice revenue stream.
Yea but if they bought that much Steem it wouldn't really serve any purpose of further selling their product. People have millions of Steem, I don't see how it really helps Coca Cola to have more than ten thousand to 100,000 or so. It would primarily be used to keep themselves from being flagged because they upvote their own blog post and they would upvote other people and reward them for logo designs or contests or something.
Icould see a lot of people signing up for stuff like that. I guess.
I don't exactly see why almost any large corporation would put millions into Steem, but if they did I think the original creators still have a large portion of Steem between themselves to flag abusive stuff at least, +the community would like you say above.
you've thought this out well. I am generally against this site having advertising for the reasons you stated, but you make a lot of good points to the contrary.
Assuming it happens and everything keeps moving along as normal, it could drastically increase the value of steem. That alone could be worth it.
It seems to me not doing something like this is leaving huge value on the table for the network's users. And as far as data-mining, that can already happen on the blockchain, so I don't see it as a reason not to have advertising.