Much hope is placed on technology as the savior of advertising. This is why almost every major agency or network has its own “lab” or innovation arm focused on tech (primarily meaning web software) as a hedge. This is why my business partner and I started Curation Station. We wonder: Can the apparent scalability and profitability of an algorithm trump a practiced and accepted services offering? Or, how might we blend the perfect ad+tech mix?
I’m curious about newer entities like Joseph Jaffe’s Evol8tion, which aims to match brands and startups. As Jaffe explains in a recent Digiday interview, “A majority of startups are built on the premise of get big fast and then monetize that scale in terms of brand-advertising dollars. What would happen if we began with the brand and then worked our way backward? Start off with the business problem, the brand challenge and the consumer needs, and then work backward to a startup that exists — or maybe doesn’t yet exist.”
Some brand problems might be better addressed by purchasing a tech idea (in the form of a startup). I’m a firm believer this approach is worth the exploration. Walmart’s acquisitions of Kosmix and Small Society serve as useful examples. But the brand has to be one that believes tech ideas can be viable and even better solutions to business problems than bespoke content delivered via mass media.
Both tech and advertising ideas solve problems. The question is whether or not your culture can accept and exploit tech ideas in lieu of words and images. The cost of servicing a tech idea might simply outweigh a less innovative traditional ad solution.
And then the apparent simplicity of the tech side of the ad+tech cocktail might be deluding us a bit. If we could just buy or launch some tech, all our problems would be solved. Former Barbarian Group owner Rick Webb suggests there’s a myth of the algorithm. The myth presumes a mechanized ability to scale and churn money trumps services, at least in terms of valuation.
“How is Groupon going to scale in some sort of algorithmic way that justifies its current market cap of 18x revenue? …Can Groupon find developers and salespeople more easily or cheaply than Omnicom can find account people and art directors?”
Indeed, at some point, most algorithms need human intervention. Services—billable hours—complete the picture. Webb notes even, “Google AdWords was primarily a self-serve product. But over time, a sales staff became necessary.”
What the tech ingredient lacks, the services ingredient provides. The solution isn’t either/or, but a balance.
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