Once upon a time, there lived a man named John Wanamaker (1838-1922). Many things can be said of Mr. Wanamaker: he was a retail innovator who invented the money-back guarantee; he was a political figure who served as the Postmaster General, and he was the last surviving Cabinet member of President Harrison; or that he was a very successful businessman whose estate would have been worth over 1 billion dollars today. But, for the purpose of our topic, John Wanamaker was also one other thing: the father of modern advertising.
‚ÄúHalf the money I spend on advertising is wasted; the trouble is, I don’t know which half.‚ÄĚ This Wanamaker saying, that many in our space are familiar with (though few can attribute correctly), is the core market need around which the Online Advertising space was formed. At the time of Wanamaker, and even a century later, the below statements were facts of life for every marketer:
- The main (and almost only) way to promote your product or service was to ‚Äúshoot in all directions,‚ÄĚ as there was no easy way (or only rather simplistic ways) to reach potential clients of one‚Äôs target audience.
- Measuring the efficacy of the campaign was almost impossible, as you couldn‚Äôt tie the promotion to deal-closing, and the revenue generated by it.
To those of you who are familiar with sales cycles, or have served in a Sales capacity in their career, the analogy would be walking into a pitch blasting away with everything in your arsenal with the hope that something sticks; and then never knowing if you actually managed to close the deal. Or, put another way, it‚Äôs like selling to a person whose needs, goals and constraints you don‚Äôt understand a-priori, while at the same time not being able to tell after the fact if your product, price, and partnership were a good-enough fit.
Fast forward a century… it is a brave, new Marketing world. Online Advertising giants like Google and Facebook, as well as a whole ecosystem of companies, tools, and experts, have emerged as a result of successfully disrupting the space of advertising, which was craving a solution to the unmet market needs of targeting and measurability.
Google‚Äôs tremendous revenue streams stem from both technological and business innovations. On the technology side, it‚Äôs developed a search algorithm that was the best of its kind, and allowed users to unlock the power of the Web by finding the knowledge they seek. This tackled #1 above, since instead of having advertisers try to guess what their potential clients were in the market for, those clients would self-proclaim it. In parallel, Google created a business model that kept the search free for users while having advertisers sponsor the search from revenue they know for a fact they generate. This covered #2 above. Everybody wins.
Facebook built on the foundations Google introduced, but took a slightly different tack. While it kept the business model, it was Targeting, rather than Intent, that it went after. By building a technology which was so engaging that it made people want to self-proclaim who they are (while overcoming past inhibitions to do so over the Web), it allowed brands to interact with potential consumers, create awareness and support direct response efforts. A different solution to the same problem mentioned in #1 above ‚Äď and a very compelling solution, judging by Facebook‚Äôs breakneck growth.
The revolution, however, did not stop there. These innovations have had far-reaching implications on the Tech space as a whole. In the past, starting up a tech company had two main obstacles. On the cost side, significant outlays of cash were necessary to purchase the technological platforms (application servers, databases, web servers, etc.) required to run software the startup wished to sell. On the revenue side, tremendous efforts were required to convince users to pay for licenses that would sponsor building the technology. It was a vicious cycle.
Nowadays, SaaS (Software-as-a-Service) solves for the former challenge. Thanks to tools like Amazon Web Services (and many others), almost any team with an idea can start iterating on it using minimal financial resources. Online advertising solved for the latter. Instead of charging for their product directly, many companies ‚Äď from Kayak through Pinterest to Twitter ‚Äď keep their offering (or some portion of it) free, and depend on online advertising to generate revenue.
Today‚Äôs chief marketers, whether they are called CMOs, VPs of Marketing, or something else, are vastly different than their equivalents from 15 years ago ‚Äď as are the expectations of them. Not unlike John Wanamaker, in the past CEOs treated the Marketing department‚Äôs budget as a ‚Äútax‚ÄĚ they had to pay. They knew it was necessary, though suspected it was spent sub-optimally but couldn‚Äôt prove it.
In stark contrast, in today‚Äôs age of measurability, every chief marketer is accountable for her budget, and constantly being required to show hard, unequivocal results. In a way, the Marketing department has transformed from a cost center into a profit center. Since now not only is the cost (read: marketing budget) clear, but so is the revenue directly generated from it, everybody in marketing is held to a higher standard ‚Äď ROI, profit, revenue, etc. In a way, this type of clarity levels the playing field between marketing organizations of competing companies, and complicates the lives of marketers (while at the same time, simplifying them).
So, in addition to doing the best marketing work possible, marketers need to look for technology that will help establish a competitive edge. In a way, we‚Äôve gone full circle: technology disrupted marketing, which in turn disrupted technology, which is now called upon to serve as a differentiator for marketing teams.
We will end with John Wanamaker. After initially writing his own ad copy for a while, he later hired the world‚Äôs first full-time copywriter, John Emory Powers. We can only imagine what shape conversations between the two took. However, we can assume that, if they were alive today, such a conversation would start with Wanamaker asking Powers, ‚ÄúWhat have you done for me lately? Prove it!‚ÄĚ