In this week’s Signal: Why companies with no sources of revenue are worth billions; simple psychology could be the problem behind top-secret information leaks; the top 21 winners in Film and Film Craft from Cannes; Apple’s ads irritate viewers; Henrique De Castro’s ‘twinning’ ad strategy; shaking up ad tech might fix its problems; Randall Rothenberg’s rant against Mozilla; and more.
To the links …
Snapchat’s Complete Inability to Make Money is the Reason It’s Worth $800 Million (Quartz) There are plenty of uncanny parallels between Snapchat, which is now valued at $800 million, and Instagram, which Facebook acquired for $1 billion. Writer Marcio Jose Sanchez lists them, and notes that the last one is by far the most interesting: Neither company has any sources of revenue at all. “It’s hard to see how a revenue-free company like Snapchat could be anywhere near an $800 million valuation were it not for the precedent of Instagram (and, some would argue, YouTube before it),” writes Sanchez. “Absent being acquired like Instagram, and with the constant pressure to eventually turn a profit, it’s hard to see how Snapchat could maintain that valuation for the long term.”
How Secrecy Can Distort Data (New Yorker) According to “The Secrecy Heuristic: Inferring Quality from Secrecy in Foreign Policy Contexts,” a new paper soon to be published in the journal Political Psychology, simple psychology could be the problem behind top-secret information leaks. Mark Travers, a social psychologist at the University of Colorado at Boulder, who wrote the paper with two colleagues, explains: “When we have a hard problem, we rely on easy-to-understand rules of thumb instead of grappling with it. Information quality is a hard problem, so we have a proclivity to fall back on secrecy as an indicator of quality. And sometimes that works for us. But sometimes it doesn’t —for instance, when people are too eager to classify documents because that makes them seem more important. Or when people want clearances because of an unquestioned intuition that the secret stuff matters more.”
The World’s Best Commercials, 2012-13 (Adweek) The Cannes juries are in, and Adweek’s got the top 21 winners in Film and Film Craft. After watching thousands of commercials, the Hegarty’s Film Lions jury and the Pytka’s Film Craft Lions jury awarded three Grand Prix, 21 Gold Lions, 38 Silver Lions, and 70 Bronze Lions.
Apple’s TV Ads Touting Company Values Flop With Viewers (Businessweek) I noticed these ads irritating smugness, thought to myself “well, that’s Apple,” and moved on. But this story confirms my initial reaction – the lowest scoring ads ever for Apple. Ouch.
Yahoo’s ‘Twinning’ Ad Strategy (Digiday) Wth a revamped sales strategy called “twinning,” Yahoo’s vision in advertising comes down to splitting the difference between the audience data side and the content side. “Yahoo hopes to position itself directly in the middle,” writes Brian Morrissey. “Yes, run ‘native’ ads with Yahoo that take the form of its new ‘stream ads’ format that takes the look and feel of editorial content, but pair those with audience-targeted banner buys.” Twinning was crafted by Henrique De Castro, who believes the industry “now realizes that content and context matter.”
Ad Tech Today Is a Dead End (Digiday) Paul Berry, founder and CEO of RebelMouse, touts that the current paradigm of advertising technology is fundamentally broken. Technology has tried desperately to send the perfect advertising message to the right person at the right time. Ad tech has used the concept of context to deliver, say, a Verizon ad to consumers when they’re reading about PRISM. But the problem is, it doesn’t work, claims Berry. “You are more likely to summit Everest than click on one of these ads that accompany this post you are reading.” But there is a way to fix it. “Everything we need to shift into the new paradigm is in front of us now,” he writes. “But like any paradigm shift, it’s going to come with massive turbulence and displacement.” Yup.
Ad Tech Isn’t Making Money (Digiday) Metrics like revenues, transactions and impressions served help ad tech companies look great in the eyes of investors and potential clients, but when it comes to answering questions about their profitability, those companies don’t say much. Why? According to Jack Marshall, it’s because “despite rapid growth, they continue to lose millions each quarter and to burn their way through VC funding.” But that’s not necessarily a problem. “Ad tech remains in its infancy,” he adds, “and most companies in the market are focused primarily on scaling their businesses. For them, investing in things like technology, sales teams and marketing is more important than near-term profits at this point in their evolution. It makes sense.”
Mozilla’s Kangaroo Cookie Court (IAB) Mozilla’s intention to block third-party cookies by default, has sparked the ire of IAB’s Randall Rothenberg, who writes, “It is not a clearinghouse for cookies — It is a kangaroo cookie court, an arbitrary group determining who can do business with whom.” Mozilla’s “Cookie Court” is, he says, “just another blatant attempt by a powerful tech company to destabilize efforts by multiple stakeholders to reach consensus about how lives and livelihoods should be aligned in the Internet era.”
Facebook’s Big Whiff on Traffic of Commercial Intent (Hunter Walk) Hunter takes us through his experience with Facebook ads in the context of what is obviously a commerce opportunity on the service. As he put it, Facebook “whiffed.”
Ad Viewability Debate Disrupts the Marketplace (AdWeek) We long for a solution to “viewability,” but let’s be honest. It’s not there yet.
FTC commissioner calls for way to ‘reclaim your name’ (ITWorld) The Do Not Track and privacy debates are increasing in vigor. This is one topic we all must lean into.