Augmented reality apps: A business model

One key to selling advertising is your ability to assure the advertiser that people will see his or her ad. One of the problems with Web sites — especially news Web sites — is that they have so many pages. The chances that someone will see an ad (if it appears on just one page) are lousy.

One key to news and information in the 21st century is user participation. Think YouTube. Think Wikipedia.

Augmented reality lets you hold up your phone (or other mobile device) and see information about what is right in front of you in the world. So I was thinking about advertising, audience metrics, and user involvement.

The app that makes sense to me is one that’s keyed to a particular, defined geographic area, and one entity must control the app for that area. Maybe it’s one app for all locales, and the entity leases it from the vendor. I think a monopoly in each location would be necessary — not only for the profit end, but for the convenience of the users. They won’t bother checking three apps for a review of one restaurant.

The content of the app would not be only reviews — it can include photos, experiences, coupons, and (yes) ads. But to make it super-appealing, it can’t be ads only. That would never provide enough value to the audience.

So the app feeds both ways, right there on the street. Point the camera at the building or landmark or whatever — then tap the image on your screen. Then you’re in the node for that physical site. Immediately you have a choice — your own choice — to see paid-for content (e.g. from the restaurant, or from the city government, say) or unpaid content (from users, from journalists); you also have the choice to input content from the same screen, the same node. So immediately, everyone is equal — you, the user; the advertisers; the content producers, the public, the journalists.

You could even become a “fan” of a node — thus receiving a notice whenever any new content was added to that node.

Users can add new nodes. It would be as simple as adding a location to “My Maps” in Google Maps.

Putting the user experience first

Most of the content producers would be users just like you (think Yelp). But content can also be supplied by the entity that controls the app — and that content can be so labeled. I would hope that would mean added value — journalists signing their names to a restaurant review should, in theory, lend some credibility to that review. In the beginning, the app could be seeded with this kind of non-advertising content (like a guide to the “best of” that city).

This is not an earth-shattering idea, but I was thinking that the ease of two-way information flow really is a key to success in today’s information environment. I don’t want simply to consume content; I want the opportunity to add, contribute, comment, or correct. I want that option to be as easy and up-front as the existing content itself.

I also envision a much nicer experience — for the users — concerning the advertising. Instead of making users angry by interfering with the content they want to see (floating ads, pop-up ads, etc.), this app can give them clear choices — view coupon, view menu, view special offers. (This would be vastly preferable to having my phone thrust ads at me when I pointed it at something.)

Each view of a node can be tracked. Each visit to the node can be tabulated. I think the opportunities for selling would be fantastic — the whole process could be automated. The advertiser pays a small fee to have the privilege of viewing all visits to a node. This is like micro-metrics for local businesses. The fee is necessary because you want it to be monthly or yearly, and you want it tied to a true identity. The account can be modified to allow advertisers to input and update their own coupons, etc. Then they pay per ad, per length of time, per update, etc. But it’s all hands-free for the entity that owns the app.

Keeping it clean and good

Users and content producers (e.g. journalists) also need to be registered users before they can input anything new, but the app should be free, and views and contributions should be unlimited. In other words, the whole system is purely supported by ad dollars. But it’s ultimately local — that’s what makes the whole thing work. One of the things I love about Yelp is that I can click a user’s name on any review and see all the other reviews posted by that person. This allows me to better judge whether I should trust that person’s opinions.

The part that’s not hands-free (or hands-off) is the curation. Someone in the organization that manages the local app needs to be paying attention to traffic and usage patterns. If it’s left untended, it will go to ruin as quickly as an unweeded garden. Spammers will rule. Advertisers will game the unpaid content. It will all turn to junk. (Users should be able to flag bad content too.)

There’s extra value to be extracted from tracking the usage patterns: An increase of activity on a certain street, or a single node, should alert the managers to the potential to add value — and also bring in new advertisers. An upsurge in traffic to a certain bar means that other businesses nearby ought to be paying attention. It’s time to target them and sign them up for an account.

Oh, and just because I’m calling it an “app” does not mean it’s for the iPhone only. This content would feed into one single database (for the local manager/owner). The contents of that database can be served up on an iPhone, a BlackBerry, a Nokia phone, or even a Web page. The contents can be served whether the serving app is interactive or not. And if I were buying this from a vendor, I would want to make damned sure that I own and control the local data, and it’s in a portable format!

Update (10:40 a.m.): Forgot to mention that I had these ideas while reading an excellent post by Dan Conover: New media virtual interview No. 2. It includes a segment about augmented reality.

3 Comments on “Augmented reality apps: A business model

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  2. “I think a monopoly in each location would be necessary — not only for the profit end, but for the convenience of the users.”

    There are no more monopolies in this context — except psuedo-monopolies created by momentum and useage. There is no mechanism to sustain a monopoly. Isn’t this is a key characteristic of the internet.

    “Immediately you have a choice — your own choice — to see paid-for content (e.g. from the restaurant, or from the city government, say) or unpaid content (from users, from journalists) …”

    Why would a user choose to view paid for content? Isn’t that going to dilute the eyeballs you have to sell to advertisers?

  3. @A Devils Advocate – “paid-for content”: for example, a menu from the restaurant.

    I understand what you’re saying about monopolies. It wouldn’t be a mandated monopoly, but rather a de facto monopoly, because multiple vendors in the space would make it impossible for any of them to pull in sufficient revenues to support the whole system.

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