Several upstarts are hoping to open up P-to-P traffic to advertising. P-to-P networks represent an attractive -- albeit relatively ad-untested -- market: 12- to 24-year-olds and heavily male. By some estimation more than half of all internet traffic is due to P-to-P file sharing, although that can be misleading as the large file sizes moving through such networks artificially inflates traffic rates.
Time is right
The timing is no coincidence. Vendors have been trying for years to create ad models for P-to-P markets, but many of the potential advertisers in the space -- for example, the entertainment industry -- were wary of adding any credence to the networks.
"They would have hated to do something on the marketing side that compromised their legal position that there was no real infringing use," said Eric Garland, CEO of BigChampagne Online Media Measurement, which tracks online content distribution. But, he pointed out, that sentiment has changed since the entertainment industry's Supreme Court victory against Grokster in November 2005.
Mr. Garland also points out that many pundits predicted the entertainment companies would do business with the former bad guys, the Kazaas and Limewires of the world, after the Grokster verdict came down. That has not been the case. Instead, the bad blood has created what he calls a "little intermediary business" -- entertainment companies working through third-party vendors to try to create retail or non-copyright-infringing experiences.
To get a sense of that bad blood, consider the first page of the presentation deck that file-seeding service Intent Media is taking around to agencies. It quotes Supreme Court Justice Stephen Breyer in the Grokster case: "Intent MediaWorks, for example, protects licensed content sent across P2P networks."
Intent President Les Ottolenghi said there are 2.7 to 3 billion P-to-P downloads a month (in comparison, Apple's iTunes has sold only about 2 billion songs since its inception), and he predicts "we won't be talking about P-to-P in 12 to 16 months; it will be a content-delivery network."
Behind Coke's Jay-Z video
Intent attaches an ad to a piece of content and lets users pass that content around the internet, through P-to-P networks and other file-sharing tactics. It wraps what Mr. Ottolenghi calls digital-rights-management business rules around the content that allows it to be tracked among IP addresses. That means a marketer using Intent to spread content across the web will know exactly how many times its clip was viewed. Intent was responsible for the best-known recent example of marketing in P-to-P, an 8-minute Coca-Cola-sponsored clip from a Jay-Z concert at Radio City Music Hall.
"The question is, how do you step into that [P-to-P] search stream ... and meet that consumer at a point of download and monetize it?" Mr. Ottolenghi said. He said studies have shown more than three-quarters of those consumers would be willing to take free, legitimate content with advertising. "The big question for consumers is: 'How can I get a lot of content very easily and use it how I want?' They're not saying 'I wish I could rip off a music artist.'"
Jeff Malmad, director of digital media at Mediacom, said advertising to consumers on P-to-P networks is really a compromise. "If consumers are looking for content in P-to-P and you can't persuade them not to, you can meet them in the middle and provide them with additional info about content or brands," he said.
'Hooked' on file sharing
Mitchell Reichgut used to head up interactive at Bates Worldwide Advertising, New York, and launched Jun Group four years ago as a traditional ad-services company. But in the midst of launching Jun he "got hooked" on file sharing. It reminded him of when he first got into web design.
"It's much harder to distribute to a large P-to-P audience than you think," he said. "P-to-P connects users to each other so even if you have something really hot or valuable, putting it on one or 10 or even 50 Limewire clients isn't going to necessarily get it out there broadly." His company has worked with Cadbury Schweppes' Yoo-Hoo brand as well as with Coca-Cola and MTV.
Former antipiracy venture
Also trying to forge a business model in the space is a former antipiracy venture, Skyrider, which is making the transition to an ad technologist. Skyrider allows advertisers to buy contextual ads around searches in the network, and a few weeks ago the company introduced the ability to serve video ads dynamically into P-to-P transferred files.
In such a scenario, a content owner could choose to upload a file to a P-to-P network and then sell ads against it, using Skyrider's technology to switch ads in and out depending on where in the country the file was going and when the file was being downloaded.
The company doesn't yet have any customers for its video-ad-insertion product but is talking to several advertisers, said Chris Redlitz, VP-sales for Skyrider. Most of those discussions so far have been educational. "The market started out a little bit on the wrong foot but there's a long path for it to grow into a legitimate market that has a large audience," he said. "We have to get through short-term perceptions for long-term viability."