Tuesday
Jun152010
Three Lessons the Software Industry Can Share with Display Advertising.
Tuesday, June 15, 2010 at 06:45AM
AdBean is approaching its second birthday this summer. A big milestone for us and a time of reflection. When I look at the display advertising industry today it reminds me of what I saw in a prior life in the IT industry. My background prior to AdBean was actually in the technology consulting space helping clients implement big systems. The 90’s were a great time to be a systems integrator (SI). Y2k, the first dotcom boom, the expansion of corporate networks and infrastructure technology, and big software companies producing a lot of expensive stuff that did not “talk” each other. Good, profitable times. Then came a recession and companies became cost conscious and a lot of talented people started making products and building business models that attacked this expensive technical infrastructure. Out of that early decade recession and industry, come three lessons that can be applied to display advertising landscape today.
Lesson 1. New Delivery and Service Models Need to be Created.
My favorite example of this is Salesforce.com. Before them, their product category line, sales force automation (SFA) and customer relationship management (CRM) was dominated by big companies, like Siebel Systems, with a traditional software implementation model. Expensive software to buy, expensive consultants to implement, expensive hardware to buy, and a ton of user training to go with it. And if your users did not use it because it was difficult to learn – well your ROI was just cut in half or more.
Salesforce gave people an easier way. Just create an account, login and you are up and running with your new sales management system. It was one of the pioneers in delivering Software-As-A-Service which has now become the defacto software model for just about every tech start up. No big expenses, no big barriers to sale. It seems common now – but 10 years ago – it was almost unheard of. Tracking prospects was not their invention – making the technology accessible was. The SaaS model has taken billions of dollars of expense out of the IT market. New delivery and service models will be needed in banner advertising to remove accessibility barriers that lock a lot of advertisers out. What can you do to deliver the same end product but in new efficient ways?
LESSON 2. Someone is attacking your cash cow.
The SAAS model also attacked the cash cow of systems integrators like me. The logic went “Why pay those guys an embarrassing amount of money to install and set up this software?” The software companies countered – “why go to a third party SI when you can come to the experts – we may be expensive but we wrote the software and no one knows it better.” Both arguments have a different value proposition – but they both say the same thing – don’t go to the guy in the middle.
What is your cash cow? Media Buying, Ad Design, Campaign Services? These functions form the core “infrastructure” of banner advertising and like technology a decade ago - a source of expense. Media buying / planning is basically answering the question – where should I run my ad? Ad design work is answering – what should my ad look like and what is the message? Campaign Services (account management) is answering – how are my ads performing and what changes should I make? What is really important in the future is that these questions continued to be answered – not the process in how they are answered. Are you answering these questions in fast, efficient or automated ways? If not – someone else is trying to and business history says time is on their side.
LESSON 3. You need to care about your client’s performance.
Above, I mentioned that user adoption rates of software destroyed ROI for technology investments. Software companies use to think that was not their problem. How can they control what happens at the client site? But it became their problem when the client did not get the value and they did not renew their maintenance contract. Smart companies then created new departments called “Client Success Teams” and added “Client Advisory Boards.” Tech companies had to make their client’s success part of their business model.
I think there is a real timely acquisition that has been made that illustrates this point. GSI Commerce bought the retargeter Fetchback. eCommerce is a competitive world and very mature in internet software terms. Why would an eCommerce company want someone in the banner advertising space? Because GSI wants to move beyond providing a utility platform to a we-help-you-make-money platform. Given 98% of eCommerce site visitors do not complete a transaction, retargeting is a very logical banner advertising fit.
Have you added services that extend your capabilities beyond just what a client might expect? The publishers, Ad Networks, and Agencies that grow in this industry will be the ones that stop trying to "sell ads" and take ownership for performance. If you don’t – the next guy will.
Lesson 1. New Delivery and Service Models Need to be Created.
My favorite example of this is Salesforce.com. Before them, their product category line, sales force automation (SFA) and customer relationship management (CRM) was dominated by big companies, like Siebel Systems, with a traditional software implementation model. Expensive software to buy, expensive consultants to implement, expensive hardware to buy, and a ton of user training to go with it. And if your users did not use it because it was difficult to learn – well your ROI was just cut in half or more.
Salesforce gave people an easier way. Just create an account, login and you are up and running with your new sales management system. It was one of the pioneers in delivering Software-As-A-Service which has now become the defacto software model for just about every tech start up. No big expenses, no big barriers to sale. It seems common now – but 10 years ago – it was almost unheard of. Tracking prospects was not their invention – making the technology accessible was. The SaaS model has taken billions of dollars of expense out of the IT market. New delivery and service models will be needed in banner advertising to remove accessibility barriers that lock a lot of advertisers out. What can you do to deliver the same end product but in new efficient ways?
LESSON 2. Someone is attacking your cash cow.
The SAAS model also attacked the cash cow of systems integrators like me. The logic went “Why pay those guys an embarrassing amount of money to install and set up this software?” The software companies countered – “why go to a third party SI when you can come to the experts – we may be expensive but we wrote the software and no one knows it better.” Both arguments have a different value proposition – but they both say the same thing – don’t go to the guy in the middle.
What is your cash cow? Media Buying, Ad Design, Campaign Services? These functions form the core “infrastructure” of banner advertising and like technology a decade ago - a source of expense. Media buying / planning is basically answering the question – where should I run my ad? Ad design work is answering – what should my ad look like and what is the message? Campaign Services (account management) is answering – how are my ads performing and what changes should I make? What is really important in the future is that these questions continued to be answered – not the process in how they are answered. Are you answering these questions in fast, efficient or automated ways? If not – someone else is trying to and business history says time is on their side.
LESSON 3. You need to care about your client’s performance.
Above, I mentioned that user adoption rates of software destroyed ROI for technology investments. Software companies use to think that was not their problem. How can they control what happens at the client site? But it became their problem when the client did not get the value and they did not renew their maintenance contract. Smart companies then created new departments called “Client Success Teams” and added “Client Advisory Boards.” Tech companies had to make their client’s success part of their business model.
I think there is a real timely acquisition that has been made that illustrates this point. GSI Commerce bought the retargeter Fetchback. eCommerce is a competitive world and very mature in internet software terms. Why would an eCommerce company want someone in the banner advertising space? Because GSI wants to move beyond providing a utility platform to a we-help-you-make-money platform. Given 98% of eCommerce site visitors do not complete a transaction, retargeting is a very logical banner advertising fit.
Have you added services that extend your capabilities beyond just what a client might expect? The publishers, Ad Networks, and Agencies that grow in this industry will be the ones that stop trying to "sell ads" and take ownership for performance. If you don’t – the next guy will.
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