How Short Should Ads Be?

Ads keep getting shorter, but not subliminal.

Way back in TV advertising history, there were 60-second ads. Some people still remember those; there was even an article in The Atlantic looking back on them, wistfully.

Ads used to be longer

Like most GenXers, I grew up with :30s and :15s on TV. Conventional wisdom, after I joined the industry but before bandwidth permitted online video, was to run :30s until awareness reached some level when :15s could take over as reminders or reinforcement.

Miller High Life ran 1-second ads in
the 2009 Super Bowl, featuring
the late, great Windell Middlebrooks

During my international career, I became familiar with :20s and even :10s. In Argentina, where I lived and worked for three years, ads could be any length client and agency wanted, because media time was bought and sold on a second-by-second basis. So, we made :17s, :36s, :52s, etc.

Maybe that Argentine flexibility is going global. 30-second units are still common on linear TV, but audiences can be reached on other platforms that allow for all sorts of possibilities. Bandwidth has improved and the shift to mobile devices and mobile-friendly formats, like YouTube and TikTok, permits shorter ads and new rules for what makes effective communication. The six-second format is common.

But does the six-second format work?

Shorter ads can work, but...

Magna Global, the IPG media research hub, has studied ad lengths across different video platforms. Their 2015 study found that even 5-second ads could build awareness, but it took :15s or :30s to drive brand favorability and purchase intent.

A lot changed in Magna's more recent study, just published in the last few weeks. This time, they found :06s and :15s to be similar in their ability to drive search intent, brand preference, and purchase intent. Why would that be?

One reason may be the platforms on which they ran the test: Snapchat, a video aggregator (i.e., YouTube) and a Full Episode Player (FEP, perhaps a streaming app like Hulu). Audiences are already accustomed to short ad lengths in these environments, and there were no :30s tested for comparison.

The Snapchat part of the test was interesting because more people watched :15s all the way through, but they were all placed mid-roll, about ten seconds into the content, so perhaps viewers were really staying for the content, which might explain the other finding that these ads were slightly less convincing.

YouTube was different. Viewers didn’t like the :15s, which were skippable after six seconds, but keep in mind that all of these were pre-roll ads, meaning that they were a barrier to the selected content. On the FEPs, :15s were better-received, but may also have been more expected during a 20-minute TV program.

None of these findings should surprise us, especially when you consider:

• Linear TV wasn’t part of the test and neither were 30-second ads. It would be instructive to have these points of comparison.

• The three viewing platforms in the test give individualized watching experiences, which may improve the ability of short copy to get across its messages, and also lead to less patience for longer ads.

• We don’t know the quality of the ad creative shown. There were four brands included (Clinique, Mini, Lego and a “major CPG brand”) but we can only assume their ads were adequately memorable and persuasive.

On that last point, not only do we not know the quality of the ad creative, we don't know if it took full advantage of the format. Traditionally, :15s were (mostly) just shorter versions of :30s, both seen on linear TV. Newer formats, like a six-second pre-roll on YouTube, are seen by an individual person watching a very small screen. That calls for a different creative approach, and opens creative avenues instead of closing them.

It's always nice to have more time to get your message across, and :30s will continue to run on TV. But newer formats may prove to be a useful piece of your overall plan.

Book Review: If Then by Jill Lepore

If Then: How the Simulmatics Corporation Invented the Future

By Jill Lepore

Liveright Publishing, 432 pages

The guys who invented predictive analytics never saw failure coming.

That’s the upshot of Jill Lepore’s latest book, If Then: How the Simulmatics Corporation Invented the Future. 

Ostensibly, it’s the story of Simulmatics, founded in 1959 on the idea that with enough data collected in one place, everything and everyone would become predictable. The name is an attempted portmanteau combining the words “simulation” and “automatic.” You’ve probably never heard of Simulmatics because it folded in 1970, but during its short history it played a role in electing John F. Kennedy, mismanaging the Vietnam War, seeking answers to 1960s social upheaval, and speeding the presence of mainframe computers at advertising agencies.

If Then: Book Summary

The founder of Simulmatics was Ed Greenfield, a midcentury ad man, but not like Don Draper. Lepore delightfully introduces him: “He was like a ten-million-volt Looney Tunes electric magnet, a giant red-handled iron U that pulled everyone toward him.” His personality, his ability to influence others, was what propelled him. As evidence, the story includes a lot of bold-faced names, especially from Democratic Party politics, which is what Greenfield cared about most.

Indeed, he built an impressive team. Lepore introduces the other main players early, and efficiently. Harold Laswell, the influential communications theorist. Eugene Burdick, novelist and self-styled adventurer. Alex Bernstein, mathematician and computer programming pioneer. Ithiel de Sola Pool, a social scientist specializing in technology. Bill McPhee, a FORTRAN programmer – and this is such an emblematic aspect of the story – who wrote “the core intellectual property” of Simulmatics while he was committed to Bellevue. Yes, a mental hospital.

Punchcards
on parade

Like any startup, the group had big plans. They bragged they had invented “the A-bomb of the social sciences.” They called it a “People Machine” that could predict the outcomes of advertising campaigns and government policy initiatives. Sadly, they couldn’t get out of their own way. They overplayed their true role in JFK’s winning presidential campaign of 1960. They overpromised how they could help the New York Times analyze the 1962 midterm elections in real time. They overestimated, tragically, how Western-style social science techniques could understand Vietnamese culture. They oversold their value to blue chip brands but opened the door to a legion of market research providers still selling soap today.

One gap in the story: What projects did they actually finish? The only projects fully described were the political ones, and there was only fleeting mention of having sold studies to various corporations, like Bristol Laboratories, Philip Morris, P&G, and some others. Simulmatics was always starved for data, so most of the projects had little effect. Still, it would have been interesting to read more about those episodes.

Eventually Simulmatics folded, although some of its work survived in projects undertaken by individual team members, thus laying the groundwork for today’s data-driven marketing. They accomplished just enough to push things forward, but not enough to get pinned with credit or blame for what we have now. Oddly, Simulmatics’ most accurate predictions came not from data but from the very human insights of Ithiel de Sola Pool. He envisioned with eerie accuracy the role of technology in our lives today: the interconnectedness of the World Wide Web, the ubiquity of social media, and the rise of “mobile computers,” today’s smartphones.

Why Simulmatics matters now

Lepore’s book is thoroughly researched and well-written. It’s a solid history, which is why Simulmatics matters: because we learn from history. Here’s what I took away:

• No data. It shouldn’t have been surprising, but was nevertheless shocking, how Simulmatics never seemed to have data that were complete or accurate. In an almost poignant moment, Lepore writes, “Pool raised the question that Simulmatics would never really answer: ‘What is the data we would need for this model?’” Ad agencies, which had data, filled the gap, bringing in their own IBM mainframes and offering the services to clients directly. Today we have plenty of data, but we still have to answer the question: Which data do we need to solve this problem?

• No humility. The Vietnam phase of the book is a troubling read. Defense Secretary Robert McNamara in 1962: “Every quantitative measurement we have shows we are winning the war.” That might have been all too true; Lepore points out that military progress was measured by “the number of insurgents killed,” with the implication that indiscriminate killing ran up the numbers. Humility is a function of introspection. Are we thinking things through? Are we seeing the big picture? Are tracking the right metrics? These questions are relevant to the work we do today.

• No humanity. Lepore points out that computers can simulate a flight because physical laws like F=ma are constant. “But the computer simulation of human behavior … is much more difficult. Behavior is not a law.” If, as some Artificial Intelligence experts say, the brain is just a very sophisticated machine, then eventually we will create a machine that can think like a human brain. But there is a (so far) unquantified human element that no series of If-Then scenarios in FORTRAN, C++ or Python could ever predict.

Simulmatics failed where other succeeded. There’s still lots of room for modern failure, which is why these lessons from the past are important.

What is Ad Majorem?

Thank you for visiting my blog, Ad Majorem.  When it started in the late 2000s, it was a view on modern marketing from within a large advertising agency.  Now it’s a view on modern marketing from the perspective of a CMO.

The title, Ad Majorem, is part of a familiar Latin phrase and loosely translates to English as “to the greater.”  As in, there is always an opportunity for better marketing: stronger consumer insights, more powerful ideas, channel-neutral marketing plans, and accountability so we know what sells and what doesn’t.

 

There’s also always an opportunity for better marketing people.  It’s important to me that team members keep learning as they go, staying curious and maintaining a perspective of continuous improvement.  We’re happier when we’re learning and growing, so that will continue to be a theme here.

The “ad” in Ad Majorem means all marketing communications, from social media to direct mail to Internet gaming to television commercials. To most consumer audiences all of these are advertising. My professional experience

in these channels provides a perspective that is part specialist, part generalist.

A lot has changed since 2009, not all of it “to the greater.”  We’re at a very inauspicious moment, with uncertainty, threats, deepfakes and divisions.  This blog has always avoided politics, and will continue to avoid politics, because there are too many wannabe pundits in marketing and advertising already.

That said, there’s always hope for the future, so the tone here will be hopeful as well as honest.  Don’t come here for dirt, fear or loathing. The closest I’ll come to that is self-criticism of the marketing business. Occasionally I’ll stray into a review of a campaign but only in service of a larger point.

Please comment. Otherwise this wouldn’t be an honest look at an industry where communication with consumers should be two-way, not just one-way.

One thing hasn’t changed since I started this blog.  Ad Majorem’s reason for being is to keep myself honest on embracing the challenges and changes of modern marketing. My hope is that you, too, will derive some professional growth from it.

Chances Are You're Watching TV While Reading This Post

"Ninety percent of consumers are multitasking while watching TV.  On average, Millennials and Xers are doing three additional activities while watching TV, typically surfing the web, emailing, texting, or social networking."  -- Deloitte Digital Democracy Survey, fielded November 2014.

Source:  Deloitte Digital Democracy Survey
(Click to enlarge)

Happy Twitterversary

Eight years ago today I tweeted for the first time.

To celebrate, Twitter lost 24% of its market value yesterday.

Twitter hatches

Although I didn't remember exactly what I tweeted that first time back in 2007, nor the exact date, I very clearly remembered the circumstances.  Twitter had suddenly taken SXSW by storm the month before.  I was on a business trip to Europe, reading an article about it in The Economist and decided to give it a try.

Signing up back then was very different:  You SMS'd to 40404 and by exchanging text messages you established a username and got started.  Coincidentally, just the other day I discovered a site that will find your first tweet.  I entered @SteveS1 and suddenly it all came back to me:

(Yes, I misspelled "coffee".  So sue me.)

Twitter lays an egg of its own

Yesterday afternoon Twitter's stock price was a fairly typical $51.19, but then their (somewhat) disappointing 1st quarter results came out prematurely and a day later shares are trading at $38.98.  That's about a 24% decline, not far from where it was on Day 1.

Is that bad?  Not really, for two reasons.

First, this news puts Twitter in proper company with the rest of the tech world, subject to the slings and arrows of outrageous fortune.  Just because Twitter is famous doesn't mean its stock won't go up or down.

Second, they're still racking up some impressive ad revenue, "only" $435.9 million in 1st quarter, which was 74% above the same quarter a year earlier.  Yes, it was a drop from the previous quarter, but their chief sin seems to have been missing financial analysts' expectations, which were more like $456.8 million.

The real question is whether this news represents a real weakness in ability to attract ad revenue.  Or as Twitter CEO Dick Costolo put it, the company had a "demand problem".  Here again, they're in proper company.  Many emerging media platforms have this problem, because advertisers aren't sure how or whether a new medium fits in their overall mix.

I'm not an investor in Twitter, so I can watch this play out with merely professional curiosity — what about you?  Any thoughts on the future of Twitter?

Ad Spending: Pixels are Up, Ink & Paper are Down

U.S. ad spending went up slightly in 2014 because pixels increased more than ink & paper declined.

That's my analysis of fresh data from Kantar Media summarized in this chart:

The pixels were TV (+5.5%) and Internet Display (+0.9%).  Representing ink & paper were Magazines (-5.1%), Newspapers (-10%), Outdoor (-0.2%) and FSIs (-2.8%).  Radio was also down -3.9%.

Like everything in modern media, though, it's never this simple.

Two Questions to Think About

Please consider the environment
before printing this billboard

The "pixels" category above only seems to represent the "First Screen" (TV) and the "Second Screen" (personal computers).  We don't see the Third Screen (mobile devices) and Fourth Screen (digital out of home).  That leaves us with a couple of questions.

What is TV?  As posted recently, TV isn't dead, it's just morphing into a more personalized experience.  If anything is dying, it's Cable TV.  Now, Cable ad spend actually grew +6.8% last year, a big reason for TV growing +5.5% overall, thanks to sports and political campaigns.  But viewers are cutting the cord, or at least shaving it, in favor of new OTT options.  The thing is, it's harder to track the ad revenue, which is there if you're watching The Flash online at CWtv.com, but not if you're watching House of Cards on Netflix.  Kantar says their data doesn't track online and mobile video ad spend.

What is Outdoor?  The vast majority of OOH (Out of Home) inventory is still ink & paper, although many media companies continue investing in DOOH (Digital Out of Home) and Digital Place-based Media.  Kantar pointed out "digital outdoor ad spending has grown six times faster than the overall medium".  So it's reasonable to say that Outdoor's -0.2% decline is probably a mix of pixels being up and ink & paper being down.

The State of TV Advertising Now That the Super Bowl Is Over

On Sunday, millions of people watched 4-1/2 hours of Live TV.

Today, millions of people will do the same.

As covered in my previous post, despite the popular reporting that TV is Dead, the medium is actually alive, well — and changing.  Live TV viewing is holding steady at 4-1/2 hours per day.  Much of that viewing happens on an actual TV.  At the same time, audiences are adopting new ways to watch TV, like DVRs, OTT, Online and Mobile.  It seems like we have video everywhere.

It's all TV

In the same way this blog says "it's all advertising" I'd say "it's all TV" when it comes to these new ways of delivering video.  Maybe we should say "it's all Video".  Either way, it's part of a trend as illustrated below in Twenty Years of TV Innovation.

What Social Media Taught Me on Super Bowl Sunday

My last post led to some enlightening discussions on Twitter and LinkedIn about the so-called Death of TV.  One insight was that when many people say "Death of TV" they actually mean "Death of Cable".  Much of the press on this subject talks about the cord cutters, and who can blame them?  Cable TV's delivery model forces you to buy up to 200 channels when most people watch no more than 17.

The Future of TV is Personalization

Which is a good reason to cheer for SlingTV, HBO Go, Google Chromecast and the other services starting to become available along with Hulu, Amazon Prime and Netflix.  All of these allow audiences to choose exactly what they want, which is why we said the other day that the future of TV is Personalization.  There's one day a year when 114.5 million people all watch one event, but during the rest of the year they all watch various programs that interest or entertain them.

It's all TV.  As the chart below illustrates, technology is meeting the demand for new ways to see what we want, when we want it.  TV's not dead.  It's innovating, growing and continuing to be a part of our lives.

The State of TV Advertising on the Eve of the Super Bowl

The Super Bowl has always symbolized the power of TV advertising.  Is that power waning?

Many business journalists seem to think the Super Bowl is the last bastion of TV advertising.  Just this morning as I was writing this post, The Economist daily news digest arrived, calling the Super Bowl "something increasingly rare in television: a programme that people watch live and in large numbers."

Surprise! Most TV Viewing is Still Done on a TV

Now let me explain
"Programmatic" to you

Actually, Live TV viewing is holding steady at about 4-1/2 hours per day.  Yes, 66.8% of Broadband Users Under 35 watch TV on a combination of these devices, but for all age groups most TV viewing is still done on a TV.  

This will shock Upper West Siders who binge-watch Orange Is The New Black on Netflix.  But regular people are watching live sports, NCIS, Dancing With The Stars, American Idol, Judge Judy and Big Bang Theory.  Bazinga!  

But Fragmentation Will Continue

TV was never dying; it was just following audiences to new platforms.  Cable supplanted Broadcast and new devices emerged like DVRs, OTT, Online and Mobile.  There will always be big audiences, but they will continue fragmenting.  In Ye Olde Marketing buying and selling TV was relatively straightforward and audience delivery was measured by Nielsen.  But now audiences are fragmented and sometimes not even measured.  Only Netflix knows how big the audience for Orange or House of Cards really is.  (A Los Angeles Times reporter tried thinking it through.)

The Super Bowl doesn't have this problem.  The marquee advertising will air during NBC's broadcast, and people will see it on TVs, tablets and other places.  The audiences will be big enough that few advertisers will worry about under-delivery against their $4.5 million (unless they're spending that money in the 4th quarter of a one-sided blowout).

The Revolution May Not Be Televised, but TV Will Be Personalized

But even in a big event that almost everyone watches or knows about, we see the future of TV:  Personalization.  For the Super Bowl it takes the form of second- and third-screen programming, i.e. game analysis, ad analysis and social media traffic.  Little of this is driven from broadcaster to audience; it's more of a conversation where both participate.  The famous Oreo dunk-in-the-dark tweet generated very small response:  15,000 Retweets and 20,000 Likes.  (In fact they probably generated more blog posts than that, but I digress.)  But it's OK because they learned how be part of people's conversations.  

In the same way, Oreo's latest stunt -- yes, it's a stunt -- using programmatic methods to buy a :15 in the Erie (Pennsylvania) DMA is a harbinger of things to come.  "Programmatic" is one of those words that's taken on too many meanings, but it's generally associated with media buying, just like the online ad world from which it came.  Its real value will be as a pathway to addressable TV, a way for audiences to customize the programs they see -- and advertisers to customize the messages that make them possible.

Enjoy the game -- and the ads -- and know that you'll always have plenty of company watching that first screen.  Keep one eye on those other screens, too, because they're a window to the future.

Mobile Devices Are a Way for Consumers to Reach Brands -- Not for Brands to Reach Consumers

Here's something advertisers and agencies seem slow to understand:  Mobile devices are not a way for brands to reach consumers; they're a way for consumers to reach brands.

Consider that the mobile device — the smartphone especially — is a very private zone in a person's life.  They don't necessarily want ads of any kind invading that personal space.

But the smartphone is wonderful tool for consumers to invade your space as a marketer.  Via Internet searches, shopping apps, social media and conversations with friends, they do it whether you invite them or not.

So why not invite them?

Use Mobile to Invite Customers and Prospects

Customers and prospects can contact you via certain smartphone apps.  The most-maligned is QR codes.  In the picture below is a QR code I saw this past weekend on the back of a service vehicle in Chicago.  I can't think of any better example of consumer-UNfriendly QR codes than this photo from WTF QR Codes which also sums up why I avoid them.

Not much of
an invitation

At the other end of the customer convenience spectrum is Messaging — SMS, MMS, P2P and other emerging tools.  Most of these are built in to a smartphone and very familiar, but there are also newer apps like Kik that would be handy reaching a younger audience (like Ad Majorem's teenage children).

There's also social media, of course, but only invite people to "Follow Us On Twitter!" if there's a darn good reason.

If you are extending an invitation to consumers at retail, it may be time to look again at NFC.  Could it be coming back thanks to the iPhone 6?  I've been bullish on NFC ever since my first project back in 2012 but it's been traveling a stubbornly slow adoption curve.

Ask for an R.S.V.P.

Sorry to torture the "invitation" metaphor a bit, but using "R.S.V.P." as an abbreviation, here are some principles to keep in mind:

• Response is the goal.  You're not going to rack up millions of "impressions" via Mobile (you might) but you may invite millions of customer interactions.  In other words, the quality of your audience, not the quantity, is what matters.  Think app dowloads, not ads served.

• Start with your consumer.  When and where might they be looking for something useful, informative or entertaining?  That's your chance to engage.  This Forrester video describes how American Airlines designed their mobile app around their customers' travel experience.

• Voice must be …inviting.  This past year during a radio interview, a local political candidate invited people to text him for more information — which I did, only to get an auto-reply asking for donations.  Since when do you invite people over and then ask them to pay?

• Perpetuate the relationship.  The old way of thinking is to stage a marketing or advertising event, but the kind of dialogue marketing both permits and requires today is a process, not an event.  The beauty of Mobile is that consumers can reach brands — and brands can keep that conversation going.  

Related: Who "Owns" Mobile?

Tablets Are Not "Mobile". They're "Portable"

This has been bugging me for a while.

Tablets — be it the iPad, the Kindle, the Galaxy or anything with a capacitive touchscreen larger than a Pop Tart — should not be considered mobile devices, like smartphones.

Consumer behavior proves it

All Mobile is Portable but
Not All Portable is Mobile

Sure, tablets and smartphones both run on the same "mobile" operating systems like iOS or Android, but people use them differently.  For example, people report accessing the Internet in their living rooms on both tablets (72%) and smartphones (67%), but in out of home situations, the numbers are quite different.  On the daily commute, for example, 49% use their smartphones and only 9% use their tablets.  In Stores, 75% use their smartphones and very few use their tablets.  (All of this research comes from a 2013 Forrester study; see a nice summary here.)

Why does this matter?  Follow the Money

Likewise, not all mobile ad spending is created equal.  When you hear things like "Mobile advertising spend will be about $18 Billion globally in 2014" you need to think beyond tiny, unreadable banner ads on a smartphone.  Those big numbers also include banner ads and video pre-roll that are better seen on a tablet.  That $18 Billion also includes a lot of Paid Search, which is a natural ad medium on the tablet, and a lot of Messaging, which is a natural ad medium on the smartphone.

Google Agrees:  Tablets Are Not "Mobile"  

In an SEC filing last January, Google admitted that as tablets became more ubiquitous, "their usage had much more in common with desktops than with handsets".  Going further, they said "the meaning of 'mobile' at Google has shifted dramatically to 'handset' from 'tablet + handset'."  Why tell the SEC?  Because it affects how they report their very considerable ad revenue.  It also affects how they might collect revenue in the future:  This was the same SEC filing that grabbed headlines like "Google Will Advertise on Thermostats".  So the definition of "Mobile" also matters to Google, but it goes way beyond tablets to the so-called Internet of Things, or in Google's case, the Internet of Things That Collect Ad Revenue.

God bless them.  As long as they start referring to tablets as "portable" devices.

Why Signage Is a Modern Medium

Advertising may or may not be the second-oldest profession, but signage is surely its first-oldest form.  It all started with signage.

The History of Signage

It all continued with signage, too — literally for centuries.  Sure, the production of signs evolved from stone cutting to wood cutting to paint to ink and paper and eventually electric signs, but it was all the same thing:  a one-way message from advertiser to consumer.  Even if you check Wikipedia's definition of signs, that's about as far as it goes.

Signage Suddenly Evolved

Suddenly, in the past decade or so, signage evolved.  Screen technology made signage digitized, scalable and interactive.  After centuries of signs that featured only one-way messages, suddenly signs were really screens that offer two-way communications:  advertiser to consumer and vice versa.  As these technologies developed, signage became a way for consumers to reach advertisers.

Back to the Future

Blade Runner and Minority Report both had futuristic signage technology, but Blade Runner was made in 1982 when advertising still had a (mostly) one-way mentality (advertiser-to-audience), while Minority Report, made in 2004, featured interactive ads, probably because the advertising business had already started becoming interactive.  Similarly, this past year at Cannes there was a Grand Lion for Innovation awarded to an interactive billboard at Sochi.  Passers-by could take photos with their smartphones and project them as a 3-D image on the billboard.

Why Signage is a Modern Medium

Signage is not only ubiquitous, it's been modernized.  Here are some tips to make the most of it:

• Elicit an immediate response.  In many cases it's sufficient to remind people to drink Diet Coke or tune in to tonight's reality TV show. But why stop at awareness?  If your message is compelling enough, the audience will respond to you via SMS, toll-free call, mobile Web, social media or an app download.  But you have to offer something useful, informative or entertaining.

• Make it relevant.  Screens give signage the ability to increase relevance to the consumer.  The most basic example would be to rotate messages according to the time of day (a QSR client advertises breakfast until 9 a.m., switching to lunch messages after that), which isn't possible with ink and paper.  You can also place messages according to where the screen is located, e.g., in an elevator or a doctor's office waiting room.

• Plan ahead.  Screens make signage flexible, but paradoxically that requires advance planning, not the least of which might be convincing a client to try something new and taking the time to develop creative that's relevant and elicits an immediate response.  Once you have a game plan, you're much more prepared to make adjustments.

Greetings from Startup Land

Which one delivers results?

This past month on Ad Majorem I've described in a series of posts how I went from Ad Land to Startup Land.  My hope is that you found it interesting or helpful or both.

There are a lot of differences between the two worlds.  I'd argue that one big thing Startup Land can teach Ad Land is how Technology and Marketing can work together.

One big similarity?  I've seen that whether you're in Ad Land or Startup Land, the only way to create real value is to focus on delivering results.

Here's an index to the whole series.  Thanks for reading.

How I Went from Ad Land to Startup Land

Startup Land Has No Boundaries

Startup Land, Where Technology and Marketing Work Together

In Startup Land, Management Really Is Nimble

Results Also Matter in Startup Land

Book Review:  Quick and Nimble

Results Also Matter in Startup Land

Decades ago the Ad Land pioneer Rosser Reeves asked, “What do you want from me?  Fine writing?  Or do you want to see the sales curve start moving up?”  We may argue, half a century later, as to how widely Ad Land holds that sentiment.  Startup Land depends on it – or at least depends on the sales curve rising fast enough to beat the burn rate.  

Or does it?

Years ago, Eric Schmidt described Google's business strategy as “URL” -- Ubiquity first, Revenue Later.  That worked for Google, but many venture capitalists who invest in technology seem to take it literally.  There is a lot of money poured into companies that may still be in the red for years, like Amazon, Pinterest and many others.

Dollars and Cents

Sadly, most people in Ad Land are insulated from business results until the moment when agency layoffs are unavoidable.  Agencies have been slow to embrace results and accountability.  One pundit says clients are complicit.

Last of a series

Because Startup Land is for the most part small and nimble, it’s impossible to be insulated from business results.  Everything is very out in the open.  If your company hasn’t gone public, you’re still accountable to your investors, whose money you’re spending to grow the business.  Our investors hold us accountable, and I wouldn’t have it any other way.  

Traveling in these circles, however, I am struck by how few investors really do their homework on the day-to-day operations of the companies they invest in.  Some are far more interested in financial instruments – credit facilities, warrants and the like – than in what makes the sales curve go up.  Many investors love seeing stock prices rise on the possibility of future results.  (Today's news suggests that caution is order.)

Kiss a Lot of Frogs

There’s an old saying, repeated often in Startup Land, that you have to kiss a lot of frogs before getting to the prince.  It applies both to raising capital (which we recently did) and raising the sales curve (which we are always doing).  As I’ve mentioned a couple of times in this series, it’s easy to get impatient.

Impatience may be a virtue, but don’t lose focus.  Whether you’re in Ad Land or Startup Land, focus on delivering results, not just the promise of them.  It's the only way to create real value.