Crossing The Ad Tech Chasm

“Crossing the Chasm” by Geoffrey Moore is a classic book about marketing and selling tech products. Since it was originally published in 1991, the book has sold over 300,000 copies and is often required reading in business school.

The thrust of the book is that in order for a tech startup to build a large market, it must transition from selling to early adopters to more pragmatic customers. It sounds simple -- but think of all of the new ventures that get this wrong. Despite tons of funding and lots of marketing, most startups are unable to get much traction beyond their initial users.

So how can startups better insure that they get wide adoption? Moore posits that the key is picking a niche market and then building a total solution for that market. This actually jibes with what I learned creating Pictela, the brand content platform that was acquired by AOL in 2010. By focusing on a category like retail that had tons of great imagery (thanks to its catalogs), we were able to build our company with brands like Macy’s, Burberry and Victoria’s Secret.

Once we had a foothold in retail, we then sold our product into adjacent categories like luxury goods and high-end automobiles. Over time we had captured virtually every category that was willing to pay a premium to serve high-resolution imagery through online ads, including CPG, travel and entertainment.

The key is to pick an initial market that serves as the first bowling pin. Once you knock that one down, the rest of the pins can fall. It’s important that the pins, or markets, are adjacent in some way because you want to harness the power of word-of-mouth of your customers. With a brand-new product, it’s simply too expensive early on to use paid media and salespeople alone to conquer every market at once. Therefore, you must have a great product that offers a total solution to a defined market, and those customers must help you sell to new ones.

Developing a total solution is also a key part of the puzzle. In our case, that meant enabling every image we served to have a unique click tag. This was no small feat given that some of ad units had hundreds of images in them. There were many other features that we had to quickly add to the product, including a robust reporting engine.

A total solution also meant being able to work seamlessly with our key partners like Glam Media, Undertone and Hearst. Every publisher has a unique technology stack that must be accommodated. Later, after AOL acquired Pictela, the commitment to a total solution continued with the development of Pictela Enterprise, a platform that allows agencies and marketing to self-serve and build their own units.

By no means am I saying that any of this was easy. Often, finding a successful niche market can be tortuous. In the case of Pictela, our original market was public relations. We spent a year banging our head against the wall trying to sell a product to an industry with limited budgets for new technology. Fortunately, we realized our mistake before it was too late and adapted our product to work for advertising.

Ultimately, crossing the chasm is what every startup must do if it is going to survive beyond its initial funding. Reading “Crossing The Chasm,” and taking its lessons to heart, can help startups improve the chances that they will get to the other side.

 

Tags: technology
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3 comments about "Crossing The Ad Tech Chasm".
  1. Stanford Crane from NewGuard Entertainment Corp , October 8, 2012 at 10:55 a.m.
    Great piece Matt. For those who didn't go to business school at Stanford or Harvard this should be a must-read.
  2. David Carlick from Carlick , October 8, 2012 at 12:55 p.m.
    Well said. Some of my biggest startup investing 'pains' have come from companies that tried to go directly to 'mass brand,' without first being a successful company serving a niche of 'early adopters.'
  3. Matt Straz from Namely , October 8, 2012 at 10:40 p.m.
    Thanks David and Stanford. Appreciate the kind words!