Tom Goodwin, SVP of Havas Media, published a fascinating article on TechCruch a few months ago that helps put that concept in perspective in today’s world. “Uber, the world’s largest taxi company, owns no vehicles,” he said. “Facebook, the world’s most popular media owner, creates no content. Alibaba, the most valuable retailer, has no inventory. And Airbnb, the world’s largest accommodation provider, owns no real estate. Something interesting is happening.”
Each of the organizations he named sits atop a swirling mass of chaotic systems, all with their own capabilities and unique resources. They have specialized and built proprietary algorithms that allow them to sort through this chaos and extract order. The value these companies provide is in matching the perfect product, content, or service with the exact person in need of it in that moment.
I first heard the theory that businesses exist to make order out of chaos, in the Harvard executive business program, and while it made sense then, only recently have I begun to truly understand the depth of it – and specifically to understand that this is exactly what a strong affiliate network does in our industry.
Networks Give Order to Chaos
I’ve played an integral part in building two multi-million dollar networks and I’ve learned a few things along the way about the role they can – and should – play in our industry. Why do networks exist? To add value to the systems we serve. How do we do it? We listen to advertisers, media buyers, and agencies until we come to understand their needs and goals, then we brave the swirling, chaotic mass of publishers and mailers to find those with the greatest chances of success for a particular campaign. Matching company A with service provider B is not inherently complex, but chaos comes in the form of negotiation, optimization, compliance, trust and reputation management, regulations, cultural and linguistic differences, and then the tracking of potentially millions of impressions and actions across the globe.
Some in this industry don’t see the need for networks, thinking advertisers can gain similar results through a few direct relationships with publishers they find on their own. This is like saying there is no need for Uber because we have taxis. Sure, under ideal circumstances, they may get the job done, but in the complexity and chaos of real life, the specialized ability to see the entire chaotic system at once – and to deliver available resources exactly when and where they are needed – makes a significant difference.
A Real-World Illustration
Take Madrivo for example. We have an exclusive inner network of trusted publishers; these are some of the most proven, productive, and compliant pubs in the world. In the last year, these teams have generated upwards of a million paid conversions. This is traffic that can’t be purchased directly, so no advertiser can stumble upon it without enlisting the assistance of our network. Now, with this kind of performance from our exclusive teams, many companies would have sat back, declared the chaos conquered and enjoyed the win. Complacency is not my style however, so my team ventured back out into the chaos and found more than a hundred additional publishers that ended up doubling our productivity – that’s how Madrivo delivered over 2 million paid conversions to our advertisers in the past twelve months.
Where we really proved our value (and the value of strong networks in general) is that our clients ultimately realized the same level of performance from Madrivo’s global masses of publishers as from our partnered, exclusive teams. Why? Because businesses exist to make order out of chaos, and that’s exactly what Madrivo did for our clients. Sure, it took exponentially more of the non-exclusive pubs to accomplish what just one or two of our exclusives can do, but the end result was very similar. How we get to that result and the extra work on Madrivo’s part should be irrelevant to the advertiser. They have products to develop, technologies to perfect, and competitors to monitor – they shouldn’t have to dedicate valuable resources to understanding performance marketing theories or to building an adaptive, learning analytics engine like our Techtelligence program. And frankly, all but maybe the top 0.01% couldn’t, since the volume required to generate analytics that accurate is more than they would have generated since the dawn of Internet advertising. We draw on billions of historical data points to generate our recommendations.
Increased Complexity, Increased Necessity
Now let’s look at the world we live in and how it’s changing. Ask a 25 year old when the last time they listened to FM radio was. Most only listen to online content. Even in their cars, they’re likely streaming or listening to music purchased online via their smartphone. The same is true for cable TV. The vast majority of millennials living on their own do not pay for cable. They have Hulu and/or Netflix subscriptions and use Project Free TV for everything else. Nobody wants to pay $80 per month anymore for TV. Or ask an under-30 when the last time was that they picked up a traditional, printed newspaper. I’m an educated and fairly well-read executive and I’ll freely admit it has been several years for me.
What am I getting at? Print, radio and TV advertising are obsolete. They’re either dead or dying. Old marketing strategies (and by old I mean only 10 years of age) are dead. If a company’s marketing strategy isn’t online-heavy, then they’re behind the curve. This means our industry is currently seeing, and will continue to see, a significant increase in potential advertisers. Free-market economics tell us there will be an equal response in new publishers. What was chaotic five years ago is about to be exponentially more so.
New advertisers who don’t know the intricacies of what we do may soon be unknowingly pairing up with new publishers who don’t have a clue about what works and what doesn’t. If those advertisers are lucky, they’ll at least find one that knows the laws and regulations governing our industry; otherwise, they may be in for a very costly welcome to the world of performance marketing litigation.
Never has it been more vital to have a trusted partner in this space. Never have the stakes been so high both in terms of potential revenues and painful, sometimes business-ending losses.
Chaos brings inherent risk. A chaos organizer that can mitigate those risks for all involved is the ultimate solution. And that’s what we’ve built and what we’re continuing to refine in Madrivo.
We help shelter advertisers from risking brand damage by working with proven, tested publishers. We help protect them from litigation by requiring every piece of creative to go through legal review, not by a paralegal or our receptionist who may have read some articles on compliance, but by a licensed attorney. We use custom software to monitor every send for compliance both with the law and with our advertisers’ copyrights and original creatives.
We protect publishers by never supporting a client that doesn’t pass what we call “the grandma test.” Would you print your ad in a newspaper and then hand it to your grandmother to read? If not, then it doesn’t pass the grandma test. By this rule, my team turns down about 50% of the offers that come to us. Adult sites and services, male enhancement, and miracle cures make lots of money for lots of people in our industry, but we don’t want anything to do with them. The risk for brand damage is too great not only for Madrivo but for the Fortune 500 clients and other household names that we currently work with and want to continue to work with.
Online marketing has grown well beyond the realms of Google, AOL, Amazon and eBay. I’m not saying businesses shouldn’t focus on these massive players, only that they are no longer differentiators. Every company worth its salt has SEO plans and is buying placements on these sites. The companies that will thrive in the future are those who say, “OK, we have the basics down, what’s next?” There’s a whole lot more to online and mobile advertising than just the large search and display engines, but the rest exist in a chaotic series of systems and networks, and that’s why business that want to succeed online and on mobile will increasingly turn to integrated online advertising companies and direct-response marketing channels to safely, compliantly, and effectively take them to the next level.