Startup Whisperer

How Much Is Your Brand Worth?

I was talking to a friend of mine recently who runs a major national brand.  We were talking about the perils of running brand ads online.  His concern was that he didn’t have the ability to really understand where his ads were being placed or whether they were being seen by the right audience.  The folks at Mpire rolled out a service last year called AdXpose.  It asks as sort of the “Omniture for online advertising.”  Its an all-in-one solution to provide brand verification and campaign optimization for online ads.  The team put together a research white paper that you can request here that shows over 50% of online advertising is being wasted. 

The chart below looks at the cost of delivering an ad impression.  As you can see for a standard $1.00 CPM remnant ad the cost of delivering it is typically .$10 when you load in all of the manual cost and technology.  This is basically a fixed cost so a higher CPM brand campaign ($10-$40 CPM ad) barely feels this cost.  Knowing that there is so much waste in advertising today – brands and agencies are starting to figure out that they have to tackle transparency and accountability.  The price of this brand protection is relatively small especially considering that there is so much waste.  Plus, the opportunity cost is huge since there is so much upside in having consumer brands move their budgets online.  If you no that 50% of your advertising is being wasted and/or harmful to your brand, then it would seem to make sense that you'd want to track your campaign(s) with a microscope.

 

A recent PriceWaterHouse Coopers study indicated that nearly 1 in 3 ads is never even seen because they are below the fold.  Today, only 7% of the global US media budget is spent online.  80% of that volume is distributed thru indirect channels like ad networks or ad exchanges.  The answer to the question on what is the price that a brand manager would be willing to pay for brand protection – its priceless.  

Some interesting thoughts from Mpire's Kirby Winfield from this post on Adotas.  Kirby is always excited about talking to potential customers.

Why Doesn't Amazon Build A Huge Ad Play?

Amazon is just a fascinating company.  I have never worked there and their performance over the years has been amazing to watch.  In particular, it hasn’t always been obvious that their  heavy R&D expenditure over the years was justified compared to their low operating margins.  Look at the companies in recent years from cloud services like EC2 to the Kindle.  And of course, you can see there e-commerce growth truly outpace the competition. 

I really don’t know why they are not thinking thru ways in which to more greatly to broaden their reach.  I did a post last year on why Amazon should buy Twitter.  Out of all of their investments in non-ecommerce related businesses, I have always wondered why Amazon had not more fully invested in building a world-class advertising play.  Amazon possesses all of the necessary components to build a world-class advertising platform. Amazon has a huge affiliate network called Amazon Associates.  A guesstimate is that an Amazon affiliate network has 2 million affiliates generating on average 5,000 impressions per month per publisher, or 120 billion impressions per year.  This is an imperfect estimate but most certainly if Amazon were generating less than 20 billion impressions per month via its affiliate base then it would not currently be ranked as a top 30 ad network as it is today.  The three big guys make Amazon’s advertising capability look like market share mice nuts – the  top three ad networks (Platform A, Yahoo, and Google).

Amazon has a lot of the core assets like the Affiliates program. great e-commerce and none-commerce sites (IMdb, Shopbop, etc),   They also have invested in some interesting behavioral targeting technology like Omakaze but I am not sure how much it is being invested in.  Amazon could put a great big bow around their scale on and off-their network and build a kick ass e-commerce based ad network.  For Google, the last time I checked retail revenue (e-commerce) represented 40% of their revenue.  So why doesn’t Amazon put their heads together and build an Amazon Adsense?  With all of the data that they have, there is no reason why they couldn’t build sophisticated behavioral targeting so that ads on off Amazon are super-targeted then you visited one of their publishers.  Heck, they could also build their own version of keyword bidding with their marketplace merchants in the same way that Amazon Adwords works today.  You can see some work being done on the Amazon site in terms of keyword bidding but that’s on the Amazon site. 

If I was armchair quarterbacking this, my guess is that its hard for an e-commerce focused company to think heavily about tackling a significantly different operating initiative.  I experienced this first-hand when I was at Expedia, it was always hard for the advertising team at Expedia to get mindshare since more ads on Expedia.com meant cannibalization of e-commerce revenue.  Yet, I believe that building out a e-commerce vertical ad network would be a fantastic strategy to expand Amazon’s reach in a synergistic way.

Chase Waterfalls

One of the things that I find that its useful is to use waterfall charts.  Whether you are trying to show how your company is going to hit a budget target, how M&A activities can hit EBITDA targets, or whatever, its a great way to how an initial value is increased (or decreased) by a series of values.  I always enjoy using waterfall charts.  Check out one of the best sites for presentations:  Presentation Zen.

Facebook Is Our Online Third Place

If you ever wondered if Facebook is a formidable platform then check out these stats from Nielsen.  7 hours a month a growing per month!

 

The Best VCs Always Knock Twice

I am often reminded what separates great VCs from the good ones -- its formulating long-term relationships so that they can help to identity (and subsequently invest in) world-class teams.  I was reminded of this recently after a recent conversation with a top-notch VC.  He was looking for a CEO "before" he invested in the company.  Over the years the best investors that have worked either successfully with you or wish they had will constantly keep in touch.  They know that whenever you tire of your current opportunity that they want to be first in line to have you involved with their next investment.

Communicate, Communicate, Communicate

I did a recent blog post about 90-day planning.  One of the things that I didn't mentioned was the importance of communication.  Once you have your plan don't forget to communicate.  Communicate the hell out of it.  Build a communication plan around it.  Rather, a PR plan around your plan internally.
Simplify your key metrics, hold monthly meetings, send regular meetings, etc.  Just when you think you are clear, you are not.