We’re currently living in the era of the click economy — but what does that mean?
The Click Economy means that companies of all sizes, in all industries, are competing for a single, specific user action: a click. That is to say, a user is clicking on a link to a page of your website (even if you baited them to do it).
How did clicks become so valuable?
How is this changing our economic and social landscapes? And what kind of future is in store for the click economy?
The answers are more complex than they may seem.
The Evolving Value of a Click
What is the true value of a click? Let’s dissect the question here. To the average end user, this is a practically meaningless action; it takes less than a second, and a click is something you do dozens to hundreds of times each day. Most of the time, you don’t buy anything significant. So, how is a click so valuable?
In the current era, a click can mean a number of things, such as:
The opportunity for a sale.
A user who clicks on a link will have a chance to visit your website, review the products and services you’re selling, and possibly decide to make a purchase. Accordingly, clicks are the best way to grow an online business.
Millions of businesses now operate with a familiar model; they know that 1 percent of people who visit the site make a purchase worth $100. Therefore, each visitor is worth, on average, $1. If you can spend $0.20 on marketing and advertising for each new click, on average, you’ll make a gross profit of $0.80 per clicking visitor.
Even if you’re not interested in generating sales or building a business, clicks are a valuable opportunity for you to expose a new person to your messaging. If you’re a nonprofit organization looking for donations or if you’re a motivated individual trying to persuade the masses to a new way of thinking, clicks still matter.
Possible ad impression.
You may also need clicks because of an alternative business model: advertising. Each person who clicks on a link to your site will see (and possibly click) the ads on your site. If your content is sufficiently compelling, this can generate an endless stream of revenue for you. Each clicking visitor may generate $1 of income for your business, and in sufficient quantities, this can turn into a powerful stream.
In any of these scenarios, the “click” is a measure of value and a measure of success. It’s both the driving economic force that facilitates the generation of revenue and the metric by which a company’s success can be measured.
Over the years, clicks have become more valuable.
- Increasing forms of digital engagement.
Users are becoming increasingly reliant on digital channels to learn new information, engage with each other, work, and communicate. In the late 1990s, the internet was something of a novelty. By the 2000s, it was common in workplaces around the world.By the mid-2010s, it was practically impossible to live your daily life without an internet connection.Because so much of our lives, from the news we read to the products we buy to the work we accomplish, depend on internet-based interactions, it was only natural for clicks to increase in importance.
- Shifting systems of monetization.Clicks also benefitted from shifting forms of monetization. Newspapers, for example, once relied on paying subscribers to cover the expenses of writing and printing (in addition to printed ads).
These days, most newspapers are mostly (or entirely) dependent on subsidization from online advertising – and online advertising only pays if people are clicking.
Taking advantage of the click economy can be a powerful move for any business. In a given industry, if your competitors are utilizing the power of click generation, you’ll have practically no choice but to join them.
The competitive pressure has led to the transformation of countless industries — and a transformation of the economy at large.
The click economy — is it a good thing or a bad thing?
Well, the question is more complex than that.
Let’s take a look at a valuable case study in the world of click economics: click journalism. Traditional newspapers have all but died out as the majority of the population have shifted to reading news online. This is only natural, since online content is both less expensive and more easily accessible.
To keep up, journalists have shifted to a click-based model; they write stories in an effort to get more traffic, which in turn, leads to higher advertising revenue and greater long-term sustainability.
There are a few issues with this, however, including:
- Lower quality standards.For starters, we’ve seen a significant drop in the quality standards of major media outlets. In order to get more clicks, your stories have to be fast and sensational; you need to get your story circulating faster than your competitors, and you can’t wait around to fact-check it.
Accordingly, many news stories end up getting published and shared with inaccurate or incomplete information.
- Polarization.Most people don’t click on links because they seem to be even keeled and well-researched. They click links because they evoke a strong emotional reaction. It’s much more common for someone to click a headline that’s surprising, infuriating, or defeating than it is for someone to click a headline that’s neutral or unemotional.Over time, these polarized headlines have led to a more polarized culture; people are more likely to believe that politicians are either good or evil, that the world is in worse shape than it’s ever been before, and that the small actions of a single person across the country are significant enough to justifiably your day.
- Market segmentation.As news outlets become specialized in attracting clicks in different ways, we also see heavy market segmentation. People seek out the news sources that provoke them in the ways they prefer, and news sources increasingly cater to those audiences.Over time, this leads to media outlets that are heavily biased, consistently producing the same types of stories with the same tone – regardless of what’s actually happening in the world.
The hyper-polarized world.
As an end result, we’ve ended up in a world that’s hyper-polarized, where it’s much harder to find the truth, and where 10 different people in the population will have 10 different versions of what’s going on, due to the disparities in the sources they’ve consulted.
These are just the problems with the click economy in the world of journalism. In the world of social media and big tech, we have to worry about user privacy. In other industries, we have to worry about stifled competition, distorted truth in advertising, and cheap tactics that lead to addictive user behaviors.
Where Do We Go From Here?
Where will the click economy go from here? Is the click economy going to provide the basis for the online economy forever — or will something eventually replace this system?
- Competition and costs.The online world is surging with competition. Everyone is fighting for a piece of the pie in their industry, and the costs of advertising and marketing are going up. Eventually, enterprising business owners could be forced to find some new way to increase visibility and monetize user actions.
- New devices and user behavior.We’re also seeing a shift in user behavior monetization with the development of new devices and new intended user interactions with tech. For example, subsidized devices like smart speakers and smart TVs often allow users to interact with technology in new ways that don’t require the conscious selection of a content option.
Instead, user data is collected and analyzed to make intelligent recommendations; in the future, this could force companies to become a better fit for a consumer, rather than forcing them to inspire a reactionary click.
- Ground-up demand.We’re already starting to see more user outrage about the consequences of a click economy and a polarized world. If enough consumers refuse to participate in the game, companies could be forced to change tactics.
The click economy isn’t necessarily a bad thing for either companies or consumers, but it’s a complicated consequence of our evolution into the digital age. There’s no denying that it’s had its share of negative effects on the economy and on our culture.
It remains to be seen how long the click economy will continue to flourish, but it’s likely only a matter of time before someone or something replaces it.
Image Credit: leandro alamino; pexels
Fintech Kennek raises $12.5M seed round to digitize lending
London-based fintech startup Kennek has raised $12.5 million in seed funding to expand its lending operating system.
According to an Oct. 10 tech.eu report, the round was led by HV Capital and included participation from Dutch Founders Fund, AlbionVC, FFVC, Plug & Play Ventures, and Syndicate One. Kennek offers software-as-a-service tools to help non-bank lenders streamline their operations using open banking, open finance, and payments.
The platform aims to automate time-consuming manual tasks and consolidate fragmented data to simplify lending. Xavier De Pauw, founder of Kennek said:
“Until kennek, lenders had to devote countless hours to menial operational tasks and deal with jumbled and hard-coded data – which makes every other part of lending a headache. As former lenders ourselves, we lived and breathed these frustrations, and built kennek to make them a thing of the past.”
The company said the latest funding round was oversubscribed and closed quickly despite the challenging fundraising environment. The new capital will be used to expand Kennek’s engineering team and strengthen its market position in the UK while exploring expansion into other European markets. Barbod Namini, Partner at lead investor HV Capital, commented on the investment:
“Kennek has developed an ambitious and genuinely unique proposition which we think can be the foundation of the entire alternative lending space. […] It is a complicated market and a solution that brings together all information and stakeholders onto a single platform is highly compelling for both lenders & the ecosystem as a whole.”
The fintech lending space has grown rapidly in recent years, but many lenders still rely on legacy systems and manual processes that limit efficiency and scalability. Kennek aims to leverage open banking and data integration to provide lenders with a more streamlined, automated lending experience.
The seed funding will allow the London-based startup to continue developing its platform and expanding its team to meet demand from non-bank lenders looking to digitize operations. Kennek’s focus on the UK and Europe also comes amid rising adoption of open banking and open finance in the regions.
Featured Image Credit: Photo from Kennek.io; Thank you!
Fortune 500’s race for generative AI breakthroughs
As excitement around generative AI grows, Fortune 500 companies, including Goldman Sachs, are carefully examining the possible applications of this technology. A recent survey of U.S. executives indicated that 60% believe generative AI will substantially impact their businesses in the long term. However, they anticipate a one to two-year timeframe before implementing their initial solutions. This optimism stems from the potential of generative AI to revolutionize various aspects of businesses, from enhancing customer experiences to optimizing internal processes. In the short term, companies will likely focus on pilot projects and experimentation, gradually integrating generative AI into their operations as they witness its positive influence on efficiency and profitability.
Goldman Sachs’ Cautious Approach to Implementing Generative AI
In a recent interview, Goldman Sachs CIO Marco Argenti revealed that the firm has not yet implemented any generative AI use cases. Instead, the company focuses on experimentation and setting high standards before adopting the technology. Argenti recognized the desire for outcomes in areas like developer and operational efficiency but emphasized ensuring precision before putting experimental AI use cases into production.
According to Argenti, striking the right balance between driving innovation and maintaining accuracy is crucial for successfully integrating generative AI within the firm. Goldman Sachs intends to continue exploring this emerging technology’s potential benefits and applications while diligently assessing risks to ensure it meets the company’s stringent quality standards.
One possible application for Goldman Sachs is in software development, where the company has observed a 20-40% productivity increase during its trials. The goal is for 1,000 developers to utilize generative AI tools by year’s end. However, Argenti emphasized that a well-defined expectation of return on investment is necessary before fully integrating generative AI into production.
To achieve this, the company plans to implement a systematic and strategic approach to adopting generative AI, ensuring that it complements and enhances the skills of its developers. Additionally, Goldman Sachs intends to evaluate the long-term impact of generative AI on their software development processes and the overall quality of the applications being developed.
Goldman Sachs’ approach to AI implementation goes beyond merely executing models. The firm has created a platform encompassing technical, legal, and compliance assessments to filter out improper content and keep track of all interactions. This comprehensive system ensures seamless integration of artificial intelligence in operations while adhering to regulatory standards and maintaining client confidentiality. Moreover, the platform continuously improves and adapts its algorithms, allowing Goldman Sachs to stay at the forefront of technology and offer its clients the most efficient and secure services.
Featured Image Credit: Photo by Google DeepMind; Pexels; Thank you!
UK seizes web3 opportunity simplifying crypto regulations
As Web3 companies increasingly consider leaving the United States due to regulatory ambiguity, the United Kingdom must simplify its cryptocurrency regulations to attract these businesses. The conservative think tank Policy Exchange recently released a report detailing ten suggestions for improving Web3 regulation in the country. Among the recommendations are reducing liability for token holders in decentralized autonomous organizations (DAOs) and encouraging the Financial Conduct Authority (FCA) to adopt alternative Know Your Customer (KYC) methodologies, such as digital identities and blockchain analytics tools. These suggestions aim to position the UK as a hub for Web3 innovation and attract blockchain-based businesses looking for a more conducive regulatory environment.
Streamlining Cryptocurrency Regulations for Innovation
To make it easier for emerging Web3 companies to navigate existing legal frameworks and contribute to the UK’s digital economy growth, the government must streamline cryptocurrency regulations and adopt forward-looking approaches. By making the regulatory landscape clear and straightforward, the UK can create an environment that fosters innovation, growth, and competitiveness in the global fintech industry.
The Policy Exchange report also recommends not weakening self-hosted wallets or treating proof-of-stake (PoS) services as financial services. This approach aims to protect the fundamental principles of decentralization and user autonomy while strongly emphasizing security and regulatory compliance. By doing so, the UK can nurture an environment that encourages innovation and the continued growth of blockchain technology.
Despite recent strict measures by UK authorities, such as His Majesty’s Treasury and the FCA, toward the digital assets sector, the proposed changes in the Policy Exchange report strive to make the UK a more attractive location for Web3 enterprises. By adopting these suggestions, the UK can demonstrate its commitment to fostering innovation in the rapidly evolving blockchain and cryptocurrency industries while ensuring a robust and transparent regulatory environment.
The ongoing uncertainty surrounding cryptocurrency regulations in various countries has prompted Web3 companies to explore alternative jurisdictions with more precise legal frameworks. As the United States grapples with regulatory ambiguity, the United Kingdom can position itself as a hub for Web3 innovation by simplifying and streamlining its cryptocurrency regulations.
Featured Image Credit: Photo by Jonathan Borba; Pexels; Thank you!