Industry Prospect

The digital advertising market is on the verge of a big change

The essence of advertising technology is to create an efficient market that matches products and services with the most suitable audience and consumers. However, it is an undeniable fact that the current digital advertising market is plagued by chaos and is on the brink of collapse and reconstruction. The prevailing model of digital advertising has been selling users' attention to developers in order to achieve tremendous advertising revenue.

The internet era has taken this model to the extreme, with massive advertising revenue becoming the primary source of income for giants like Google and Facebook. These tech giants monopolize the market by offering free digital content products to attract more users, and in turn, they sell users' attention to generate income. However, developers have not achieved the desired results from this arrangement.

• The competition for user attention in digital content products is a zero-sum game, leading to increasing costs for developers to acquire users while their income continues to decline.

• Ad tech intermediaries and invasive ad formats infiltrate every aspect of users' daily activities, such as using social media apps, browsing the web, and watching videos. Consequently, users' attention and personal data are treated as commodities and sold indiscriminately.

• Cross-device user tracking and opaque data sharing through data platforms give rise to issues like fraud, privacy infringement, and malicious advertising.

The tremendous scale brought by the internet has destined Web 2.0 (approximately 2005-2015) to be an era of centralized dominance by internet giants. This business model heavily relies on closed networks where each platform exclusively benefits from its accumulated users and data. It's worth noticing that although most users don't genuinely prioritize privacy and data rights, the profits generated from data ownership remain of utmost importance.

New Paradigm of Digital Advertising in Web3

During the mature stage of Web2, we witnessed some platforms attempting to change the commercial models of advertising to attract creators with more direct subscription methods and higher incentives. For example, creators on content creation platform Patreon can receive 88%-95% of subscription fees; Twitch streamers can earn 50% of subscription fees. Furthermore, on April 25th, 2023, Twitter officially launched its subscription service for creators.

These innovative attempts by Web2.0 internet platforms serve as positive incentives for creators.

We believe that Web3.0 brings a new paradigm that tilts towards producers and consumers because the most exciting aspect of Web3.0 is the removal of intermediaries, which allow producers to directly connect with consumers and thus efficiently drive innovation.

These advanced production relations and fairer distribution of power and earnings will undoubtedly attract more emerging developers or producers, leading to another explosive wave of innovative species, reminiscent of the Cambrian Explosion.