Canoe Should Have Bought Inventory To Prove Itself Or Get Rich While Trying
In the years since Canoe Ventures launched, it wasn’t hard to find a top sales executive offering severe questions about its long-term viability. Certainly, no one in that role emerged as a visible advocate for its possibilities, showing up at industry panels to express optimism with founding CEO David Verklin.
Some networks signed up to use the platform – many tied to the cable operators that owned Canoe -- but where were executives at an AMC or Bravo touting how Canoe-facilitated campaigns either were delivering higher pricing or should soon? (Perhaps they did in some press releases.)
But that was telling. So was the apparent disinterest of influential Merrill Lynch analyst Jessica Reif Cohen. Early on, she would ask executives at the Canoe owners how things were progressing and when the money would start to gush. That stopped a while ago.
On Wednesday, Canoe all but went out of business, downsizing to shift its focus to the video-on-demand platform and away from interactive (iTV) advertising.
The Canoe blueprint essentially held that a network would pay to license its ad-serving platform. That would then allow it to sell the iTV ads at a much higher price. The reason? The ads, which would allow a viewer to request coupons in the mail via a remote control, would be worth it to an advertiser because there would be Internet-like metrics and a chance to establish a lasting relationship with a consumer.
Canoe had plenty of technological challenges with its plan to build a footprint so the iTV ads could be delivered into tens of millions of homes served by the six Canoe owners, which include Time Warner Cable and Cablevision. The ads needed to flow through set-top-boxes and getting them to work in synch appeared to be like herding cats.
But even as a wide rollout moved slower than hoped for, Canoe did appear to offer networks enough to seize the opportunity and begin pitching advertisers on a would-be game changer. For example, back in December, Canoe said it could deliver iTV ads into 25 million homes.
So, when networks moved slowly, Canoe should have showed its faith in its core request-for-information (RFI) ad-serving by putting its money where its mouth was.
Canoe executives may have all kinds of valid reasons why this suggestion would have fallen flat. (CEO Kathy Timko said two months ago: “I think 2012 really marks a shift from building a platform and technology to a much more go-to-market strategy.”)
But, the company should have proved to networks what it could do beyond presentations or laboratories or even tests. With cash.
The well-funded Canoe should have invested in a sales force – hired some of the best-connected sales types on Madison Avenue -- and bought inventory from networks itself. It should have showed up at the door of a Discovery or History channel and offered to buy space for a higher price than the network could have gotten on the open market.
Then, it should have re-sold it to advertisers and agencies itself, taking the profits. Canoe then would either have impressive results to share with networks, hoping the proof would get them to license its technology. Or, it could have simply kept running the lucrative business on its own.
On the agency side, at entities like VivaKi, there appeared to be executives eager to experiment with iTV advertising -- rooting for Canoe -- but if networks were ho-hum about making it thrive, their options were limited.
Suppose Canoe purchased ad space from Discovery and History and kept finding itself unable to re-sell it. Then, it might have had some valuable answers about its prospects sooner – albeit maybe ones hard to stomach.
Often, questions comes up at companies whether it is better to build or buy? In a different sense, Canoe should have done both.
Who knows? It might have been able to prove its worth or gotten rich while trying.