“The best minds of my generation are thinking about how to make people click ads” – Jeff Hammerbacher a 28 year old Harvard mathematician who was one of Facebook's first 100 employees.
I saw this quote in a Bloomberg Businessweek article talking about the technology energy focused on “getting shoppers to buy” and the “life dream of Silicon Valley” of ad-based business models and marketing-driven culture. Folks point to Groupon, Zynga, and Facebook as examples.
The fascinating part of this focus on monetizing ads is how many of the entrepreneurs loathe marketing itself. Larry Page has openly critiqued marketing, saying at one point "if we have to use marketing then we have failed". Yet Google made $36 Billion on advertising revenues in 2011. They are reliant on a business model that they don't wholly buy into themselves. Larry Page is not alone. Robert Stephens, founder of Geek Squad, stated that "marketing is a tax you pay for being unremarkable.” It has taken on almost a mythic notion in the technology sphere. Facebook is sincerely trying to create more personalized recommendations based on social connections to make ads and deals more relevant. But it is still all about ads as a revenue model for Facebook as far as the eye can see.
And the fact is, even as a marketer, I believe their issues with ads aren’t necessarily misguided (or at least the way a lot of advertising goes to market). I get their point. Many consumers loathe “disruption” and the amount of marketing in today’s world, too. And many businesses are struggling to find the return since marketers need scale and ROI. The struggle between consumer experience and advertising results has been messy, and it's getting messier.
Service instead of advertising business models?
So here's the rub: technology companies need to make money to fund the amazing tools and fascinating products people crave – let alone rationalize their very high valuations to shareholders. But is advertising the only place to fish? I don't think so.
Service instead of advertising business models?
So here's the rub: technology companies need to make money to fund the amazing tools and fascinating products people crave – let alone rationalize their very high valuations to shareholders. But is advertising the only place to fish? I don't think so.
If the ultimate goal is to create a profitable, scaled business model that benefits both businesses and consumers, why not pivot to focus on service rather than advertising? What are the yet undiscovered business models in service?