Taylor Davidson · Users, meet Advertisers

The shift from a product people love to a product advertisers love is tough. But that should be expected.
by Taylor Davidson · 05 Nov 2014
Where the Magic Happens, New York, NY

If you want to figure out the future of adtech, look to where consumer technology is going.

I wrote that over a year ago, talking about how we define the future of ads based on the sites and experiences where we spend our time. I continue to think about this nearly every day, particularly through the lens of the first steps by Snapchat, Instagram and others to launch their products for marketers and advertisers. The takeaway: shifting advertising spending to emerging consumer platforms takes time, cultural shifts inside the consumer platforms, and a deep understanding of how brands and agencies spend marketing dollars.

The risk to the consumer platforms in introducing ads is obvious, so they introduce them slowly, carefully vetting new ads with selected partners. For the consumer platform, it can be difficult to manage (cultural conflict and resource allocation) investing in building the advertising capabilities into the product vs. continuing to invest in building product features aimed at user growth and engagement. Building the minimum viable product for advertisers takes a deep understanding of the specific requirements (targeting, reporting, et. al.) of brands and agencies and the issues they face. Hiring the right people to introduce new ad units and experiences to brands yet still connect with the consumer product is tough, and likely expensive. Brands and advertisers are likely resistant to change unless the performance has already been demonstrated. The platforms try to convince people to “experiment” with new ad units, and have to hand-hold the first campaigns while teaching brands about the modes and methods to connecting on new platforms. Consumer platforms have to listen to what brands say, carefully recognizing what advice they have to listen to and what they have to discard. The first ads will be difficult to properly measure and benchmark compared to other platforms competing for advertisers dollars. There will be tons of articles by marketing pundits about why the platforms don’t make sense for advertisers. And if the product isn’t sticky enough, users will revolt.

But that’s how the process works. Change takes time. The incumbents aren’t the innovators. The product for the early adopters often isn’t the product for the mass market. The stars have to align for a consumer platform to make the transition from a product people love to a product advertisers love. [1] The team, funding situation, market conditions, competitors, everything has to align perfectly for a company to make it through that shift. And many platforms make the choice to go an alternate route (i.e. strategic exits) before making the full shift.

For the record, I’m long Snapchat and think the Our Story feature has a lot of potential. I’m long Instagram and their image and video ads. I’m long Pinterest and their potential to mix community, ecommerce and advertising in a truly unique way. I’m long on publishers that build new ways to connect with their audiences outside of just pageviews. I’m long on platforms that understand how to structure and leverage the unstructured data shared in images and videos. I’m long on consumer platforms that understand the value of first-party data and intent data, not because they have a lot of data, but because they use it intelligently. And I’m long new platforms that challenge our ideas of what people love to do and how advertising works.

  1. Unless, of course, advertising is prevalent in the product from the beginning. People revolt against big changes in the products they love, not the idea of advertising in situ. ↩︎