It was a grand dream, I myself was a firm believer. A level playing field where the small business can advertise, compete and carve out business away from the big boxes. Online marketing was supposed to be the great equalizer. But, as the way of the world goes, all unregulated markets consolidate upwards, into monopolies. The ascension of Google and Facebook into the “Standard Oil” of Internet has meant that the revolution is over and the status quo was all will ever be gunning for.
So, why do they win? It’s because of extinction. The term referenced comes from the world of physics, not Paleontology (the study of dinosaurs).
In physics, attenuation or, in some contexts, extinction is the gradual loss of flux intensity through a medium ~ (WikiPedia, April 24th 2018)
What caught my attention was the very concept of “medium” and the conventional wisdom accepting “gradual loss” through them when it comes to the various upper funnel metrics of online marketing: impressions, installs, clicks, etc.
3 Myths About Click Discrepancy, for Digital Strategists
As the old edict goes, in order to understand why something happens there are a few basic principles to use.
- What is the simplest explanation?
- Who stands to gain from the current situation?
- If a radical transformation were to happen, what could be done to stop it?
And so, when viewed through this prism it’s easy to understand that click (or other KPI discrepancy) is built into the business model of established operations. They either take advantage of the natural complexity of tracking systems and fortify against this in their terms and conditions. Or they pre-design them into their margin at the expense of their demand partners.
So, if that is the simplest explanation what are the ramifications? As the inefficiency is built into the model, the demand player that manages to overcome them is those large enough to negotiate the issues with their supply channels. They basically fix the technological medium’s intrinsic porousness with business terms or accept that not all cards are on the table as there is no auditing mechanism of the true numbers.
In this system, those who have already undergone digital transformation (mostly retail marketplaces, service providers – leadgen, apps) can work demand the terms they need. Those who did not transform die out and the smaller players are capped at niche volumes, feeding off scraps of glossed over niches the pack leaders rushed by. These, of course, include criminals and gray hat practitioners that operate at such high margins through pressure tactics, upsells, cross-sells and compliance violations, that this doesn’t affect them.
Total transparency is bad news for everyone who is on top in this system – the monopolies, criminals and kingmakers of the new order (google, facebook, amazon, etc.)
Why Digital Strategists Love BlockChain
By using a distributed ledger, BlockChain would allow for a complete reconciliation of the tracked metric between demand and supply parties. There would be no “extinction” the “medium” of marketing would not alter the fundamentals of data integrity. The monopoly would be reduced to total transparency about actual pricing rates and backroom deals would be out in the open. This would motivate smaller players to band together in a wholesome transition to wholesale buying as opposed to the current divide and conquer practices employed by the largest supply players.
Blockchain, to re-cap:
is an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way ~ (Marco Iansiti; Karim R. Lakhani, Harvard Business Review, 2017, Jan–Feb Issue.)
Digital Strategy for Blockchain, In Conclusion
We have all taken a beating in the hands of monopolies during our careers, sometime we ride the wave, sometime the wave pushes us under. The moment of transformation will begin when players large enough up the food chain will incorporate Blockchain to transform their own business. This will flush through the system elevating their advertisers, giving them higher ROI and capturing market share at the expense of the old guard. We can’t wait.
Also published on Medium.