Towards the end of the boom, I went to a seminar that one of the One-to-One marketing gurus held - Rogers or Peppers or somebody like that. At the Plaza in Manhattan, lots of execs around, and the thing is sponsored by some enterprise software company, maybe BEA, who had helped a couple of companies go one-to-one with great results. The speaker was talking about how important it was to take a fresh look at your business and restructure the whole thing, top to bottom, to be able to deliver customized products. Applause, happiness, buy-in.
Then BEA's speaker started talking about some case studies and success stories. There were two types: companies that were so desperate that they couldn't help but get better with a relatively simple implementation, and companies that redesigned themselves to embody the one-to-one mentality. From BEA's perspective, the quick fix sounds great. Install our magic product and you'll make millions! And of course the companies that rebuilt their businesses around personalization made BEA look fantastic, even though BEA probably didn't have much to do with it.
The elephant in the room was everybody else... all of the companies that were doing well enough that a quick fix wouldn't be possible and the pain of restructuring didn't sound so attractive. Lots of head nods from this bunch. Not a whole lot of compulsion to act... and they didn't. And now personalization has faded away and we're on to the next set of buzz words and fancy speakers.
So how does this apply to online media? I think that the way the "optimization" vendors have sold themselves is a lot like how personalization vendors were selling themselves a few years ago. It sounds great; it works in a few desperate cases; but really isn't compelling on its own - you have to change your entire philosophy to make it really work.
A great example of this is the DFP optimization product. I'm not privy to all of the details, but I think it's fair to make some assumptions. DART works on a priority basis. When people want to optimize using DART, they take a spreadsheet and figure out which deals work on which inventory, and upload the spreadsheet into DART as priorities and maybe frequency caps. DART's optimization tool does this automatically.
You know how Poindexter's tools work? They take a big old dump of server logs. They run it through SAS. They take the statistical outputs and build some kind of targeting matrix. The ad server chooses ads based on the matrix.
How about Arbiter? Same thing, more or less. How about SDC? Same thing, different day.
So wait, Mr. Inquisitor. These guys have been telling me that these tools will make me rich. Hotbar loves SDC. MSN loves Arbiter. AOL loves Poindexter. (nobody loves DART yet - but somebody will). So what gives? Shouldn't I be talking to these guys?
It's a lot like personalization. If you have a really big problem - like a few billion completely undermonetized impressions - these tools may be able to help you. They're a bit better than the spreadsheets you're using now. But they're not going to help you build an efficient business, and in fact, they're more likely to hurt you in the long run.
Great example - if you want to buy media from MSN, they have to first qualify you into one of their media programs. Either you buy performance media (powered by Arbiter) or search media (Overture/proprietary) or premium media (internal). If you want to buy performance, you get a great PowerPoint deck and a totally incomprehensible "bid guide" - basically a rate card on steroids. Three months later, after you negotiate (negotiate? but I thought it was a bid guide?) and get approved (but I use a standard 3rd party server?) and renegotiate (don't ask) you may be able to get your campaign running - but no guarantees that it works, since they can't manage your campaign to an ROI goal unless you buy CPA.
So a few customers wind their way through this mess and place a buy. And MSN throws a party, because they're making money where before there was nothing. And great rejoicing at Arbiter; they go try to sell the same thing to the other desperate housewives in the industry... and make no headway, because SDC and Poindexter and all the other "optimization" companies are all looking for the same low-hanging fruit.
The problem is that this distracts MSN from fixing their core problem - that they don't really understand performance media. They haven't invested in aligning their business with the advertisers, and now they have a whole staff dedicated to supporting the Arbiter program. More inertia, more time wasted, and no closer to the holy grail. And let's be honest - while I'm picking on MSN, we're talking about pocket change for them. What's $100MM when you're running a $30B business?
I think SDC, Arbiter, Poindexter (and to some extent DoubleClick, Zedo, Falk, etc) are part of the problem, not the solution. They're not helping companies reinvent themselves, they're providing stop-gap measures that just postpone the inevitable. Part of me is glad to see companies like Centrport go bankrupt, and if the space wasn't so hot with VC money we would have seen quite a few other follow in their footsteps. I'm keeping my eyes open for a new, more holistic approach - one that acknowledges that managing media the right way requires some sacrifices and reinvention and helps people achieve them.
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