Many years ago, I worked in a corporate office with access to a CEO who had a strong background in marketing. I learned a lot from him through conversation and osmosis. He seemed to me to have a clear-cut view on value. I don’t know for sure if he believed this, but I felt he saw value as either present or not. While he had a marketing background he also a very strong real-world background in hard materials, their manufacture, and the full scope of operational management required to move raw materials into products and into customer’s hands. Through osmosis, I learned that value is there or it is not.
When you create a technology, and you present it as a product or solution in a marketplace, a question of value emerges. Does value exist? Now, a vast generation of websites have sprung into being since the first Dotcom days that present value in the form of Web marketing. It means that anyone can use websites for free to get their email, share information, track projects, post pictures and notes about one’s life and so on. A seemingly infinite legion of websites exist that you can use for free to do things you once bought software to do.
I will not say that the software that some websites replace had any more or less value. I go into that separately by implication on my earlier article about Amazon Lambda and Aurora. Rather, what I am saying is that when the website is free to use and is funded by marketing, the value of that website shifts from the person using to the group that funds it. That funding groups has a purpose for their investment.
People do not really engage with Web advertising the way they do TV commercials. One of the things I inherited from that CEO was a question about the effectiveness of marketing efforts. You cannot really measure marketing in the definitive sense. Sure, you can trace impressions but you cannot definitely correlate purchase conversion. Ads may have been a factor but the gap in time and space between communication and product/service adoption greatly dilutes measurement. Factors other than and more important to the adoptee may have been in play. You cannot really, truly know and thus when you pay to market in the telegraphic sense, you may have an uneasy relationship with the investment.
You pay anyway to market because there is value in communication. The question is not about marketing but the frequency and type of marketing. When people do sales and marketing, there is an art that adapts appropriate to the circumstances. That is lost in objectified messaging which is why the messaging must be well-tailored and properly timed for delivery. Transmitting marketing over the Web is a much different matter. Does the ad belong where it is placed and does it mesh well with the function of the page or mobile screen it shares space? Does any of that influence reception to the message? Those are just basic, web marketing 101 questions. The real question is advertising the future of funding technology?
Please allow me to share my bias. I do not have any faith in Web advertising on both the scale it is delivered or in the way it is delivered or as a fundamental means to fund technology. I never had that confidence in Web advertising and it is the chief reason I never pursued it as a means to build and deliver technology. On the other hand, I do think Web advertising (and mobile and whatever comes after) does have a place when appropriately designed. The future of technology solutions delivered and updated over a computer-based network may not endure through advertising.
Where is the value then. The two best examples of the right way to do it are Angie’s List and Ancestry.com. Like the advertising models, the idea is the sale of information. Whereas Web advertising information can be misleading in value, easier to subvert through botnets, and challenge to trust in terms of genuinely accurate measurement, other kinds of data have immense value. The ratings data on e-commerce websites drive retail conversions through natural word-of-mouth. Data that you can use is the thing that has value. As such, the guidance is that some kinds of technology solutions could be fully defined according to an open source model and underwritten by data.
That is what Google does when they define a plurality of their software infrastructure with open source technologies. They provide useful tools such as Chrome, Android, Docs, and Search for free all underwritten by sold information. The same story with Facebook, Yahoo, and several other major organizations though, again, much of it is marketing data in which the sustainability of that model may be in question. The data Ancestry.com provides is of great interest to their audience and so you see a vibrant enterprise. The data they provide is actually free but they add value around that data through an online subscription in which you use tools to engage with and help manage that information.
Considering these leading examples perhaps the best investment decision in terms of technology is not what it is made of (because that can change) but what data does it deal with. A tool that tracks yearly snowfall in your backyard may be valuable to the neighborhood or city. Such a tool that scales to deal with snowfall in Antarctica could be of immense value to parties affected by such information. The ability to build is important and must be cultivated and the open source model is the way to do this. What is particularly unique is the configuration of data relevant to certain audiences. That is the real lesson of the Dotcom waves that can be repositioned around data proven to be worth the value assigned. A lesson we may see play out in the renewed investment in media companies.