Category: Product Management

I recently wrote about the problems I see with the assumption that advertising will pay for everything. Even in the month since I wrote that, world markets are moving in a direction that’s making us all look for a life raft. All of us except those who got the big bonuses over the last few years and didn’t blow them on an overpriced city pad. I hear they are in Indian beach huts.

My second point last time, and forgive me for shamelessly quoting myself, said, “If advertising is going to be central to your proposition, then make it central to your product development plans”. I’ve been thinking more about this, and I can’t stress how important it is. So, I’m going to say it again. And put it in bold: “If advertising is going to be central to your proposition, then make it central to your product development plans“.

There is a counterargument; I know. Get your product right first. When you get all the bells and whistles built into your product or service, then people will love/use it, and advertisers like that. Well, see my previous post: advertising can’t pay for everything in this world. If the advertising experience is poor for the consumer, you’ve blown the bit about getting your product right. If the experience is poor for the advertiser, then you have a mountain to climb to convince them to come back.

No, if your product will rely on advertising in whole or in part to fund your business model, build in advertising hooks and concepts from day one; otherwise, you may as well hand that VC money back and go and join all the bankers on a beach in India for a year or two. It doesn’t have to distract too much from your central product proposition, but you need to remember that it is core to your business proposition.

“Yeah, yeah, yeah”. I think that’s what I can hear you saying. “We won’t do that”. But I’ve seen great companies – big and small – make this mistake again and again.

I’ve lost count of how many websites I’ve met that add advertising after they’ve finished the content, system design, and build. And after they’ve spent a lot of money on the design, which happened not to have a brief to include advertising. Then they add the advertising spaces into the look and feel of the site, and the whole thing suddenly looks disconnected. The content system isn’t built to pass any intelligence back to the ad system, and they struggle to place ads in the right place. Worse, the content system has a content structure that doesn’t map to how the sales team want to sell the ads, so from the first sale, nobody’s expectations are met.

There are fewer companies I’ve met, but they exist, that build a way to have users register to use a product but don’t consider how that could enhance the advertising proposition to both the consumer and the advertiser. So it’s a separate system that doesn’t share intelligence. Several times I’ve seen teams re-engineer registration interfaces just to facilitate some use in the advertising mix (and remember, knowing you’re a registered user of a site can, sometimes, mean you see less – not more – advertising).

And while I’m talking about registration, you are asking for a little more than an email address, aren’t you? Gender and country – fields which don’t identify an individual in any way (unless your country consists of two people and only one of them is a man) can be invaluable in determining which advertisers might be interested in your audience. Crude, yes. Simplistic advertising, yes. But more data is better, and it’s a start.

Remember that you are selling audiences, not spaces. You need to know a little about them to construct a meaningful advertising proposition. However, you also need to remember that there are laws – with good reason – that mean you can’t invade an individual’s privacy. It’s a good trade. I get a product for free, and I tell you a little bit about me. You need to aggregate and anonymise data. If you have solid aggregated data, then you stand a chance of building a good advertising proposition. And in any product development, it’s a good idea to know your audience, isn’t it?

Whatever your product, think about how the ads will fit into the mix. It’s not just websites. Many years ago I worked with a company that specialised in sponsored SMS messages. You know the kind of thing. My team scores and you send me a text. Somebody else pays for the text. All very nice until you remember you need to send me the score and fit the sponsor message into fewer than 160 characters. And that sponsor text needs to include a message and, often, a response mechanism. You see the problem?

I could go on. But you don’t need me to rub it in, do you?

So, for one final time, if advertising is going to be central to your proposition …, oh, you get the point.

Where are you reading this? Are you sitting in an office or at home? Do you have the television on in the background or the radio in your ears? Maybe you’re mobile in some way? Is it a laptop in a coffee shop or are you on a train? Wherever you are, if you’re reading this, you are connected to the vast web of information; you know all the good stuff on the internet and all the bad stuff the news channels make up.

But you are also connected to a vast web of advertising. Switch on your TV, change your radio channel, look out of the window, open a magazine, or surf to my employer’s web page. You see advertising everywhere.

There was a survey once that I can’t find right now that counted how many advertisements an average person was exposed to in a normal day. Who’s average? What’s normal? Perhaps they just made up a number. But it was a big number. Quite big. Maybe very big, but – as I said – I can’t find it. Nevertheless, you don’t need a nice lady with a clipboard to tell you that you see a lot of advertising, because you know that, don’t you? From my recollection, the interesting point of that survey was all the advertising you come across that you don’t remember seeing.

Anyway, as I can’t find it, there’s no point talking about it, right? I can summarise the last three paragraphs like this: there’s a lot of advertising everywhere.

I’ve had a fascinating couple of weeks, talking to some very smart people building some – on paper – interesting new online products. We talk about how to integrate a range of advertising options into these products.  See how much I’m giving away. Lawyers scare me. I’m saying no more about them.

What’s been clear for a couple of years now is that everybody, from big corporations to small start-ups, is convinced that they can monetise their ideas with advertising. Advertising is, apparently, going to pay for everything. If you fall into the right demographic, your mobile phone will be paid for if you listen to a few ads. By the way, if you don’t want a mobile phone paid for by advertising, that’s fine. Some people, however, would love not to pay a penny to speak to their friends.

And there are three problems with this approach to product development and innovation. Firstly, many people who think their product or service is attractive to advertisers haven’t actually thought about how the advertising experience will work. It’s a kind of approach that says, ” Our product is great; people will love it; people will use it; and advertisers will come.

Hey, consumers will have to really love it and come in droves. There aren’t many products that have achieved that level of attention where advertisers know they have to be there. Facebook is a nice exception that springs to mind.

Secondly, if advertising is going to be central to your proposition, then make it central to your product development plans. Over the years I’ve seen too many great products have advertising added in as an afterthought. And it rarely works. This needs to be the subject of another piece, but please take the advice now and read a later post when I get round to writing it.

Thirdly, all these advertisers who will come have limited budgets. They can’t place ads everywhere. Your audience has to be very compelling to move budgets. Logic tells me that there is a point when advertising won’t pay for products and services any more. Should this stop your development? Absolutely not. We move on by innovation. But if your product is to stand a chance of making it, seriously evaluate the advertising proposition. Then cut the expected revenue by 80%. Then work out how to fund the gap.

I do think the digital space has an advantage here. Increasingly, money is moving into the digital advertising arena from other media. So if your new idea is digital and – importantly – you’ve thought through the advertising model and – most importantly – you’ve worked out how the advertising experience with your product (from user and advertiser sides), then you may see advertising as a funding source, but I don’t think your advantage is huge.

So here’s my appeal. Wherever you sit in product or service development, on or offline, think about how advertising will be integrated and put it at the heart of your development plans. It’ll pay, in more ways than just with revenue, in the long run.

Disclaimer: the views here are my own and are not necessarily the opinions of my employer. You have read the full disclosure, haven’t you?