Sorry Phil - http://blogs.zdnet.com/SAAS/index.php?p=56... close, but you're way off.What Mr. Wainewright doesn't get is that ads are changing... more than they ever have before. In the old days, ads were on TV and billboards and newspapers. Ads would encourage people to remember them and, when they were in the purchasing mood, they translated into sales.But there are basically two people in the world of the future: those that produce content and those that produce goods. Those that produce content will be funded by those that produce goods. Yet ads in this new world will be those that produce content driving sales of those that produce goods. There will still be things like brand loyalty and brand recognition, but the space between realizing you need something and having a link presented to you where you should go to buy it will get very very small. Whomever makes that transition the most frictionless for the consumer and the most efficient for the business will win the goods producers. Whomever can make transition the most profitable to the displayer and most relevant to the reader will win the content producers. And the key brands for this new world will be the places where you can show the most ads and make the most money (either through ad displays or transactions) doing it.Mr. Waineright is concerned that ads will be displayed in applications. That's completely unnecessary. All the applications need to do is drive more ad displays somewhere ELSE where it's more relevant. For example, let's say I download a Google branded word processor. In the word processor there's a search box. There are no ads. I sit there for a hundred hours working on my word processor and then I realize I need a fact for something I'm writing. If that is a net positive queries per year, that's a huge win for Google. Because when I click through that search box, I'm being presented with an ad by Google that could have gone to anybody. All you need is incremental ad displays to offset the cost of building the software. Here's the equation: If developing an application produces x incremental queries per Y user per year, then do it, where X * (average revenue per ad) * Y > cost of investing. So if it costs me $5 million to develop an app, and I make $0.05 per ad, I need to have 100,000 people download it, and have them do ~3 extra queries per day. A million people need to do +1 extra query every 3 days. If the revenue per ad goes up, the numbers of people i need to have come on board goes down... FAST.Second, Mr. Waineright says that the money is made on the transaction, not the advertising. But he fails to notice that every transaction has a cost of customer acquisition. Imagine the following: I have revenues of selling a book for $20. My margins are 10% so I made $2. But I also had to run a holiday campaign to get customers to come into my store to buy the book, which cost $1.50. Net profits = $0.50. If my campaign could be reduced in price, so that it only cost me $0.75, the rest of that money is pure profit. And that's what Google Adsense is doing. It's not taking a cut of the transaction cost, it's taking a cut of the customer acquisition cost. It's both more tolerable to the consumers and to the companies, because it actually benefits them both. And there's absolutely no reason this can't be extended to just about any application out there on the market. You want to check the weather? A link appears that tells you about Hawai'in vacations or umbrellas. As long as it's done in the context of letting you do what you want to do and is unobtrusive, it's a win for everyone.I'm telling you... ads are going to be the new oxygen."I dont want to sell anything, buy anything or process anything as a career. I dont want to sell anything bought or processed, or buy anything sold or processed, or...process anything sold, bought... or processed, or repair anything sold, bought or processed, you know, as a career. I dont want to do that." -- Lloyd Dobler (John Cusak in Say Anything)