How to successfully navigate the new digital landscape
By: Joe Zawadzki Published: June 4, 2012
What is ad technology's North Star?
How do we make advertising work better? How do we empower the marketing professional with the technology to delight brands by delivering the actual business outcomes that matter? How do we help them do their jobs better? The answer isn't click-through rate, it's not queries per second, and it's not even real-time bidding.
It's this: There's product; it's sitting on a shelf. How do we work together to get it off the shelf? That's it.
If we can do this, we've solved the big thorny problems that cause all of us consternation.
The chief marketing officer ends up with a scalable, measurable, quantifiable system that can instantly drive demand and product sales. No more questions about what's working and what's not.
The agency returns to the role of strategic partner and advisor, instead of constantly being tasked to do more with less in a digital channel that historically takes 10 times as much work as other channels to simply manage.
Publishers can actually get paid enough for their media. Analog dollars turn into digital dollars, not dimes.
And every ad technology company that faces the daunting task of proving why its box on the Kawaja chart is more important can simply focus on product and be paid its fair share for the incremental returns it generates.
This isn't a fairy tale. It's already happening all around us.
For the first time, marketing professionals can go online, click a button, and buy media; or click a button and buy audiences; or click a button and buy results directly through that algorithmic optimization stuff we all talk about. Thanks to machine buying, billions of impressions can be daily scored for each advertiser and each creative or offer to determine the right price to pay to produce the desired outcome. Advertisers can click a button and access all those boxes on the Kawaja chart seamlessly. The agency can go from an overburdened 150 percent-time workforce to a 100 percent one, focusing on strategy instead of basic execution.
We need to focus on delivering results for customers:
Return on investment: Even just two times better performance with a fixed-price ad operating system makes everyone a winner. More dollars flow into, and through, the ecosystem.
Interoperability: By reducing the cost of interoperability, clients can "roll their own" supply chain. They can work with both the best-in-class global partners and point-solution specialists.
Transparency: Clients need to know not just where their ads ran, but what decisions the machine is making, and why. They need a sustainable test-and-learn platform that lets them identify the winning strategy and tactics and export them into offline channels, creative development, and product strategy.
Alignment: Clients need to know on whose behalf decisions are being made. Is the ad buying platform optimizing for marketer results, for supply yield, or margin? There are no inherently wrong answers, just a need to know because incentives drive behavior in ad tech, as in life.
Independence: To deliver truly great performance for clients, ad tech companies must offer whatever supply works best, not what's owned or most profitable.
Actionability: Reporting is not enough. Clients must be able to push insights into action instantaneously, to act on the data and do more of what is working and less of what is not working, to boost performance and get results.
This is good for everyone: Even a "modest" 10 percent more scale with 10 percent lower cost per acquisition across a $50 billion ecosystem will mean a $10 billion increase in incremental industry value. Yet, we all sometimes still think too hard about our own slice of the current pie, missing the bigger picture and opportunity.
Ad technology seems to have adopted a "random walk down Madison Avenue" mental model, where all parties are simply splitting the same marketing dollar. Those facing short-term pressures look at a value chain and think "if only I could grab X's margin, my business would be much better."
But digital marketing isn't a zero-sum game or a random walk. Using data, making smarter decisions through analytics, reducing friction in the buying process — these things actually create value.
There is a version of the Prisoner's Dilemma called the Stag Hunt that is a wonderful parable for where we are today in ad tech. It's the story of a group of hunters that is out trying to bring down a stag. If they get the stag, they'll eat like kings. It'll take some time to track this magnificent beast, and they will need to work together to bring it down. The hunters get hungry. If one breaks ranks and goes after the small game, the hare, they lose their chance for the big game. One hunter eats; the rest starve.
Digital marketing right now is a Stag Hunt.
Delivering real results — moving product off the shelf — is the big game, and the ecosystem is now in a position to get it. If we join arms, we win. If we focus on the small game — this insertion order, or my share of the margin on a $50,000 test — we lose. I think now is the moment when we can actually make marketing work; this is the group to do it, and I'm glad to be part of it.
Let's stop talking about the landscape as fragmented. That's not how we want ad buyers and sellers to view this big movement we're all creating. Instead, let's talk about how the ways in which we all work together move product off the shelf for brands and retailers; if it works for brands and retailers, it will work for all of us.