Note: This was published in Boards magazine sometime in May 2010.
So. The incomparable Carol Bartz has hired the legendary Goodby, Silverstein & Partners for ad work. The details are murky. They’re joining an advertising advisory board at Yahoo!, along with incumbent Ogilvy and Landor. Or so Kara Swisher says. Coming on the heels of the $100 million campaign by Ogilvy, even adding Goodby to the mix at all makes for high drama. It’s a good time.
It’s also, however, becoming the focal point of a long-simmering debate about internet companies and advertising that I have found very interesting for a long, long time. Business Insider’s Henry Blodget took the lead in vocalizing this criticism with the astonishing blanket statement “in the history of the internet, offling advertising has never made much of a difference in building a sustainable audience.” He does this in his usual incindiary style, going to far as to say that Goodby should have explained this to her, and she should have spent the money on product development, online ads, google keywords “or something.” (As an aside, I love how online advertising could work, but not offline. I won’t touch that for now.) Scott Rafer, quite the internet entrepreneur himself, says on his Tumblr (to which I am addicted, by the way), “No, no, no. Internet companies, even big ones, gain market share by shipping new products and marketing them well. Marketing old services, no matter whether or poorly, won’t move the needle.” It’s an interesting distinction, to talk about ‘new services’ and ‘old services.’ But let’s put that aside.
Finally, an interesting flip-side was found on AgencySpy’s recap of the Blodget article. AgencySpy quickly recapped the article — but did point out some obvious exceptions to this maxim: Hulu. GoDaddy. Zappos. I’d agree with Hulu and GoDaddy, Zappo’s, not so much. But most interesting are the comments. In just 15 short comments, the bloggers of the ad world come up with quite a few exceptions to this supposedly hard and fast Maxim: Expedia’s launch (was another travel site a new product? not really.), GoDaddy (ditto), and, the doozy, BlackRocket’s groundbreaking work for Yahoo! in the early years. (Props to the anonymous commenter “Robert.”) This I find rich. Yahoooooooo! Those ads worked. Personally, I would also add Monster.com, WebMD, and, potentially, Bing to the mix.
What’s clear to me here is that the internet world thinks advertising isn’t necessary, while the ad world can find no shortage of examples where they have helped out internet companies.
I understand the internet’s view. It’s connected! It’s social! It’s based on meme propagation theory and truth will out. No barriers, blah blah blah. It makes sense. It’s true. However, it’s true in the same way it’s true you don’t need to exercise if you eat well. It’s true. Exercise is still good.
I’ve come to believe there is something I call the “slide of faith” with advertising and technology companies. Basically, it posits that a tech company’s belief in the power of traditional advertising is inversely proportional to its growth rate in users. Or, concretely, something like this:
So, let’s take a look. On the left side we have an internet company’s faith in traditional advertising. Along the bottom we have their user growth. And somewhere in there we have a horizontal dotted line representing the best advertising can do — reality, really.
So, when an internet company is experiencing massive growth, they don’t care two whits about advertising — and why should they? However, when growth slows down, they tend to start thinking advertising can change anything.
In reality, most companies exist somewhere in the middle of this graph and, more importantly, companies evolve and change their position on the graph over time. I’ve seen this countless times in my years in the business. Once hot companies, no longer the darlings of the tech users and the press suddenly start looking toward advertising as a possible booster to their flagging user growth. It’s usually around employee 100 or so, or series C funding. Suddenly there’s a little cash in the bank, and some advisor says “hey have we thought about advertising?” Of course it can come at other times: witness Google’s recent (stellar) foray into traditional advertising. Or Bing’s early entry.
What’s most interesting to me, though, is that however much this perception changes based on an individual company’s circumstances, reality doesn’t change. Witness the straight dotted line. And why shouldn’t it? Is Yahoo! so different from a car company? Don’t other companies also rely on great products, word of mouth, innovation and competition for the bulk of their differentiation? Even tonight, I saw a Toyota commercial saying “look, we know advertising isn’t the main issue here. We’re trying to fix things. But we still want to tell you this.” (I am paraphrasing). They get it — advertising isn’t everything. It doesn’t replace a great product. You can’t shine a turd. But it can still help a good product sell more.
Sure, we can argue internet companies are different because of the unique characteristics of the web, but I fail to see how these factors benefit only internet companies. Indeed, my entire professional career (and many of yours) is resting on the premise that the same characteristics that the internet provides internet companies can be leveraged for other brands. I know that to be true. Social media can work for a car company. So why can’t a television spot work for an internet company?
Finally, do we really believe that no product, ever, in the history of the internet has “won” even if it was the less good product? Is GoDaddy really better than Register.com? On the web, the battle is won just like it was off the web: product, price and awareness. All three still matter.
Where did your mom learn about Twitter from? A blog? Or a friend.
