Two years ago I gave speeches at CIMA and iMedia events on something I called "The Oreo Doctrine," a model for understanding the distinctions and divisions in the world of online advertising and marketing. Just last week I heard it referenced by three separate sources, which - in our world of highly perishable ideas and news cycles - means that it's still quite a useful tool. So I'm dusting off a slightly abridged version and adding some commentary. (For a full copy of the downloadable white paper, click here.)
...I'd like you to grab a nearby Oreo (a virtual one will do if you're not near your snack-source). Now, divide it into halves the way you did when you were six. You've now got a separate chocolate wafer in each hand, and all or most of the cream went on one side or the other... The first cookie represents Transaction: the selling, buying, placement, pricing, optimization and reinvestment of standard media advertising units. Transactional buyer and seller organizations will be almost entirely focused on profitable buying and delivery of the common advertisement, whether it's the :30, the L-Rec, the Pre-Roll :15 or the column inch. Those who will succeed will be very good at things like negotiation and optimization. Ultimately math and science will be the intermediaries and - often - the disruptive agents.
In the very near future, I believe the transactional side of our business will be almost completely automated. Electronic exchanges, auctions, automated buying... If you're running a business in this space... you're going to be ultimately rewarded by Wall Street for taking people out of the process. You should be constantly seeking automation and looking to lock down science and math advantages through patents and technological advances. And if you're a successful buyer or seller in this space, take heed: your days are numbered. Any marketplace where high-priced humans intermediate transaction is one that's ripe for downsizing. If you're pushing RFPs back and forth on the basis of price and availability, your job just won't be there 5 years from now.
Can anyone look at the proliferation of ad networks, the development of exchanges and today's emerging Wall Street style ad trading models and not see this part of the equation coming true? Run a search on the phrase "automated online advertising" and see what happens.
The cookie in your other hand represents what I call Marketecture: a business discipline that applies complex media and communication elements in the focused solution of unique business problems. Where Transaction was about efficiently delivering ads, Marketecture focuses on profitably solving a time-sensitive marketing or business issue for the client. Transaction dies without standardization, but Marketecture will thrive on the relative chaos - "permanent whitewater" - of technical innovation that will always drive the digital world.
If you believe that your future is in Marketecture... there are steps you need to take as well. We've got to hire and train problem solving and strategic skills, often reaching outside our industry to do so. As consultants and consulting organizations do, we've got to learn to align with larger business problems than we do today. And we all need to reexamine the concepts of competition, collaboration and account ownership. The business of Marketecture will create some strange bedfellows, and last week's competitors may now end up shoulder-to-shoulder with us on today's project. In Marketecture, he or she who has the best virtual talent network wins.
Having seen commoditization and automation put intense downward pressure on price, hundreds of top sellers and dozens of publishers in our industry have adjusted and opted out of the pricing limbo contest. Some have chosen certain segregated inventory to put into the network or exchange pool; others have taken that same inventory and "plowed it under" by running house ads or promotional banners. But all are choosing to spend their valuable outside sales time focused on blending unique assets and capabilities - those things that can not be automated or commoditized - with their best quality inventory and offering them as a combined solution to marketers. Often this sale can only be made directly to the client or at the top levels of an agency. The executional planning teams have neither the time or inclination to look far beyond price.
Further, we're now seeing many network players looking to create and leverage unique capabilities and advantages so that they too can pull away from the commoditized environment in which they once flourished. All are sharing the realization that you may build a base with transactional business, but you'll make all your margin with Marketecture.
When you twist apart an Oreo, all or most of the cream sticks to one cookie or the other... it's up to each of us to decide which cookie holds the cream for us. Is your company's vision Transactional or Marketectural? In my view, you've got to choose: you simply can't be both. Hiring, skills, training, compensation and ROI for these two kinds of businesses are moving in opposite directions. Much of the dissonance and discomfort in our industry today stems from the overlap between these two visions and functions... Ask yourself in which camp you and your company belong. But if you're considering half measures or avoiding the decision, remember that great companies are those that make choices. And this is a really big one.
It still is. What's your answer in 2009?
