There is a somewhat growing popular concern related to big data backed ad-technology. Facebook (FB) stock price has been tanking, and there is growing discussion about alternatives to add supported startup economy. Ad Technology + big data sounds good as a detatched business proposition, speaking of conversion rates and micro targeting, but it also targets *you* the person, delivering wonderful things like banner adds, spam, and junkmail. Anybody with a remote concern for privacy doesn’t like the direction of advertising. And on the business side, there is a well known decreasing ROI in online advertising.
The investors in ad-tech don’t seem to notice that they themselves don’t want to be the target of ever more finely tuned precision ads; that nobody likes ads, especially not targeted ones that follow you around (a nice creative super bowl add isn’t so bad, is it?), and the bottom line problem: advertisements increasingly don’t work, and the business model that almost the entirety of the monetized internet is built on is showing signs of cracking, fracturing, could it be about to bust? Even as doubts about the advertising fueled model rises there are ever increasing amount of investment dollars flow into ad-tech and big data companies, hoping that more data and individualized targeting will be a holy grail.
There is a movement diametrically opposed to the big data dream of micro targeted spam – Vendor Relationship Management(VRM) a movement founded by Doc Searls from Harvard Berkman Center. Doc – once an ad man himself actually – in 1999 predicted that with the internet marketing would increasingly be a conversation with the Cluetrain Manifesto. By 2012 it is clear he was right about changes in marketing. Powered by the social media firehose companies are indeed listening to their customers, or at least hearing them, like it or not. And traditional advertising becoming much less relevant than what your customers “like”.
It’s early days for VRM, a set of theories that began being published in 2008. VRM predicts tools for customers that will:
“provide customers with both independence from vendors and better ways of engaging with vendors.”
And from the recently released Intention Economy, the prediction that when customers can:
“Tell whole markets what they want, how they want it, where and when they should be able to get it, and how much it should cost”
- markets will be fundamentally more efficient. VRM also has a deeply non-commercial side – related to identity, privacy, and complexity that would regulate relationships between customers and vendors. That part has generated great acadamic discussion, but unsurprisingly doesn’t have as many software companies pursing it. VRM is also a large topic, meaning many things to it’s proponents, and nothing to many others.
Advertisement systems in many ways represents a fundamental inefficiency – wether it is backed by big data ad-tech or not. Companies don’t know what you want, but they invest increasingly advanced techniques trying to guess. But there is scant evidence that the effort of targeting ads works much better than a Super Bowl Ad. What counts is our real intention. The decreasing effectiveness of advertising supported models calls for something more interesting, more innovative. In theory and change making potential, VRM is on very solid ground.
Investment prospects and hot companies:
So – will the investment bucks continue to chase the tired “more ads from robots”" model of big data analytics? And other super smart approaches such as “same adds but smaller” for mobile? Big data has been a hot area, but VC money often chases lagging indicators of hot areas – not coincidentally resulting in substandard returns over long periods. Excitement over big data backed ad-tech is rather dull and slightly sinister.. you can imagine causally clad financiers in Palo Alto rubbing their hands together and laughing ”muahhaaahhaaa” at the though of all the big data big money.. but the real money in tech is usually made in the under invested and came changing sectors – VRM certainly qualifies.
VRM doesn’t seem to be recognized yet to be a hot area to invest, but there are surely more companies and deals than those that are being announced, and it could well pick up steam. Here;s to hoping. If your an investor with VRM interests, say hi. Or Muahahaaaa – your choice.
A semi definitive list of VRM companies:
And shameless plug: http://www.mightbuy.it (just launched!)