Conversion Rates Up 50%, BS Up 100%

by , Nov 30, 2012, 7:30 AM
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A few weeks ago Mike Shields wrote a lengthy story concluding for the most part that too much VC money chasing too many ad tech companies, especially those focused on exchange-like activity, will never be successful at improving the online ad business.

Zach Coelius, CEO of Triggit, countered with the argument that "advertising technology companies bring fairness, efficiency, scale and value to the process through automated ad exchanges and real time bidding (RTB). Four years ago, less than 20 million ad impressions were available each day through RTB. Today that number is more than fifty billion a day, as millions of individual publishers have chosen to sell through the exchanges, moving to where they see the best value.... the automation of the buying process enables advertisers to buy more efficiently at larger scale. More of their growing ad budgets can be passed to publishers, rather than being spent shuffling paper. By improving the infrastructure of our industry, we are laying the groundwork for future growth that will fund a more diverse, useful and prosperous Internet."

Neither Shields or Coelius seem to focus on what to me is a larger problem: the declining ability of those whom these new ad tech developments are supposed to benefit -- advertisers and their agencies -- to understand and adopt these incremental "improvements" to online advertising.

When, as I often am, you are called to listen to an early-stage ad-tech company principal explain what they do and how it will change the world, you are quickly struck dumb by how niche the new technology is -- and how fanciful the expectations are that it will make a profound difference in ad targeting, efficiency, ROI or whatever. Moreover, increasingly the developers of said companies are unable to explain in terms that, say, a 22-year-old media buyer who knows there are no Knicks tickets coming at the end of the pitch, can understand. With the trend toward automated buying and selling, future captains of the ad-tech industry throw around "Wall Street" terms like "liquidity," and "buy-side," and use head-aching descriptors like "iterate the current stack" to explain their businesses.

All this is fine if they are talking to each other -- or some potential VC who also thinks that kind of language makes you seem really cool and smart. But that 22-year-old kid (or her boss) who has to sit through about 15 more equally obfuscated pitches before the sun sets sits yearning only to check email on her iPhone or respond to Words With Friends, hoping you won't notice and take offense.

Even if you take the smart route and explain your new ad-tech business in terms a 12-year-old can understand (which, by the way, is what I would recommend) you are still cursed by hyperbolic promises of changing the game in ways that will disgustingly enrich all within earshot. History has already proven to potential buyers of your new tech that almost nothing since the advent of Google Ad Words has truly changed the game except in the most minor ways. And for everything that has, such as RTB, there have been unintended consequences, like the freefall of CPM rates.

This is not to discourage anyone from coming up with the next big thing in ad technology -- just a reminder that sooner or later you are going to have to sell it to folks who have heard it all before, are at best jaded or highly skeptical, and don't really want you in their office.

That is a good place to start thinking about how to position your business.

2 comments on "Conversion Rates Up 50%, BS Up 100%".

  1. Zach Coelius from Triggit
    commented on: November 30, 2012 at 1:25 p.m.
    George, thanks for joining the conversation. Sadly though I think you missed the whole point of my piece which was to argue that hiring 22 year olds to spend billions of dollars is silly. My argument is that technology is replacing the whole manual media buying and selling process . Decisions should be moved from teams inexperienced young people that were required to do repetitive manual tasks to much more senior folks who can do proper analysis and who can understand the technology involved. Those advertisers who don't hire people who actually understand technology - and who instead staff with the same old people - are going to get left in the dust.
  2. George Simpson from George H. Simpson Communications
    commented on: November 30, 2012 at 3:26 p.m.
    OK, change 22 year old in my piece to 44 year old, same effect. Too many ad tech ideas chasing too few dollars (or percents of a cent :0) G

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