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I have been watching TV a bit lately (Welcome back, National Football League!) and have seen a new advertising trend that has concerned me.
I used to tell everyone how great Apple advertisements were because they would show you one of their products and they would show you how it works. These ads were great. One of the interesting things about Apple products is they don’t come with an instructional guide or tutorial. You just have to figure it out. The good news is that you have been watching their ads for months and their ads taught you how to work your phone.
Apple ads showed you amazing things: Here is how you unlock the phone. This is how you play music. This is how you call someone. This is how you take pictures. This is how apps work.
And frankly, with the diversity of the Android ecosystem, this was differentiating. I don’t know how a Samsung phone works. I don’t know what that experience is like.
With the release of the new Apple phones, they have a new marketing campaign and it threatens to up end the apple cart a bit: This is a pink phone. This is a yellow phone. This is a purple phone.
If I were Samsung, I would be running commercials of people and have them “show us” the apps they have that make people say, “wow” that differentiate the Android from the iPhone. Apple’s decision to move away from marketing the software to marketing the soft stuff of different colors could be Apple confessing that their product has become less exciting or it could simply be a costly mistake.
Native advertising is an advertising experience customized to the experience the consumer has interacting with the specific content they are consuming in a way that causes the advertising to feel like part of the content consumption experience. It is a form of advertising that at its best blends with the content in such a way as to be indistinguishable from the content and features an integration that could only occur in the context of that experience.
A practical example of this might be breast cancer awareness month in the NFL. The NFL has players wearing pink clothing, refs using pink flags, and similar integrations where breast cancer research’s signature color is blended into the NFL experience in such a way that it is both unique and inescapable. Facebook, Twitter and Google advertising is similar. Ads similar to tweets and search results are integrated into the search results and newsfeed in such a way that become a seamless part of the consumer experience. In any other context, these ad formats would be inappropriate: I can’t put pink warm-up towels on a billboard and putting facebook newsfeed ads into other contexts is similar in its lack of effectiveness. While people see Google Adwords all over the place, they are a fraction as effective as they are in the context of search results.
So a good native advertisement is one that is tailored to both the advertisers brand and the publishers engagement modality. The effectiveness of these advertising models cannot be denied however the challenge presented to advertisers and publishers is clear: Without massive scale, the burden of developing a truly compelling native ad is offputting. Asking an advertiser to support your wonky native ad format when your scale is not Facebook/Google/Twitter is uncompelling to most advertisers. Even given the effectiveness of a truly compelling integration, the amount of unique integrations that an advertiser can support is limited.
I have recently heard about “native ad networks”. This concept is an oxymoron. Aggregated native ad platforms have no scale attributes that allow them to be used in the context of a network.
I confess (and more would confirm) that there is a lot I don’t know about online advertising. One area that is an interesting area is creative development. To speak frankly, at every place I have worked in the industry, I have found that we did an inordinate amount of creative development on behalf of our clients. And I say that as a representative of the publisher/network. So agencies would say to us, “we don’t have creative, you build something” and we would toss it in for the buy. I think I had always assumed that this was the exception, not the rule. I mean, agencies are creative. They don’t really want me doing the creative development, do they?
For the sake of my sanity, let’s assume that agencies live in a world where they want to build the creative.
Having said that, that is a world where native advertising is impractical.
Every piece of advice on raising capital says that you need to have a “Use of Funds” slide in your deck, but few people do those slides well. Hint: “Marketing!” is not an appropriate use of funds.
I want to take a moment to tell you what to put on that slide. There are a few key pieces of information that you need to discuss:
1) How much money you are raising and what valuation (as appropriate)
2) How long this money lasts
3) What you are spending it on
4) What happens when you spend that money.
Here is the big concept that I find missing in most “Use of Funds” slides: Your investors want to see you use the funds in a way that will allow you to raise your next round. This slide is about telling investors what you will do with their money that will be so impressive that you can raise the next round at a substantial premium.
Re-read that sentence again. It tells you everything you need to know: This slide is about telling investors what you will do with their money that will be so impressive that you can raise the next round at a substantial premium.
The barrier you are trying to overcome with this slide is, “I love the idea, but can this team move the needle enough with this amount of funding to get to whatever the next level is?” You are not going to use the money for “marketing”. You are going to use the money to “Acquire 2,000 users”. If you have not done a good enough job explaining how you can acquire 2,000 users, you can add detail here or elsewhere. The question on this slide is, “If they acquire 2,000 users, will that be impressive at demonstrating traction to raise the next round.” If the investor’s answer is “no”, then that was not a good use of funds.
So all you need to do on this slide is think about what it takes to raise the next level of money. (Hint: It it not “launch”. Launch is one of the things you will do.) Then line those things out, along with how much money you are raising and how long it lasts.
Here is an example:
Raising $500,000 convertible note with no cap closing end of October
$250,000 already committed
Sequoia is leading round
Use of Funds
Funding through 4Q2015
Staffing engineering department
Key Milestones Prior to Series A
1Q2014 launch event
50 beta launch partners
2 big names participating in press release
Strategic partnership with Google, Microsoft, or Yahoo
$1,000,000 annual run rate at launch, 20% month over month growth thereafter
$3.0m Series A to follow
Get it? If that isn’t impressive enough to be able to raise your Series A, then your use of funds is not good enough. The investor needs to look at this and say, “If he did all this, I would sure as heck participate in his Series A, so I would be a fool not to jump on the train now!”
I was thinking about how YouTube has rocked music videos to their core along with many other thoughts about record labels and I was all geared up to write a delightful diatribe on how screwed record labels are, or maybe more to the point how musicians don’t need record labels. I cannot think of a single reason that is so compelling that a person should get a record label. That is just a fact.
Having said that, I promptly found a well-written article that I thought did the subject justice. Without further ado:
It sucks, but it is true. When I play basketball, I watch how you play and I judge what kind of person you are. Unfortunate but true, because I relate how I play basketball to how I live my life.
I don’t care about dunks. A dunk is fun, but it is, generally speaking, a pure gift of genetics. It is the athletic equivalent of being born with a silver spoon in your mouth.
A great assist is so much more. To make an incredible pass that allows someone else to score requires you to empathize with what your teammates are doing. It requires you to completely understand what is happening in the game, both for your teammates and your opponents. It requires preparation and thoughtfulness. And it is an act of kindness, a mitzvah. You not only made a great play for yourself and your team, you made a great play for the other player. A great passer makes other players play better. A great scorer does not make his team better, he just scores.
Anyone can be a great passer. But when you watch that video, you think, “I could not make that pass.” That is because you have not worked on your game enough. These are the greatest players in history. You have to spend time in the lab. You have to work on your game to be great. If you work, you can make that pass. If you don’t, you can’t. You can always get better at passing if you are willing to put in the time.
Don’t tell me about your 30 point game. Tell me about your triple double. You got 15 points and made 10 great passes and got 10 rebounds? Man, you were working. You got 30 points? Sounds like you shot a lot. I don’t need shooters, I need great players. If we have great players, the points will come. If we have a bunch of guys that love their own game, this is going to suck. Team-first is the only way to play and the only way to live and work.
In life and in basketball, you need to look to make a great pass.
(Keep watching that video, they slow roll you and save the top 10 passes for very late in the video.)
Rachel Zoe is my idol and she should be your also.
Who is Rachel Zoe? Well, if you have to ask, this is probably not that interesting a post. Rachel Zoe is a professional fashion consultant and star of her own reality TV show. I saw her reality TV show for the first time the other day and I have to say, it was about what you would expect: It was basically terrible. But Rachel Zoe is probably a somewhat interesting person: Zoe’s current client list includes Cameron Diaz, Jennifer Garner, Kate Hudson, Kate Beckinsale, Debra Messing, Demi Moore, Liv Tyler, Joy Bryant, Molly Sims, Beau Garett, Eva Mendes, Paula Patton, Anne Hathaway, Jennifer Lawrence and Miley Cyrus. Those are some big names and they basically wear whatever Rachel Zoe tells them to wear.
Anyway, one of the “dramatic moments of the show” goes like this: She is in Paris for fashion week and having an awesome time galavanting from show to show hobnobbing with the fashion-famous. Suddenly she gets a call from America that one of her clients needs an outfit for a photo shoot for a major magazine and did not like any of the clothes that Zoe sent her before she left.
Zoe becomes distressed. She actually says, “How can today go from like the best day ever to the worst day ever. My heart is pounding.” She starts whipping her team to come up with new options for her client, but in a fairly nice way. This is supposed to, I believe, create drama on the show: “crisis!” But what it drove home to me was this: Rachel Zoe cares about her clients. When her clients are unhappy, she is super unhappy. When a client is upset with her performance, it is the worst thing in the world and she will do anything to make it right.
Do you care about your performance that much or are you content to roll with the punches?
Cogmap’s home page is awesome. It is awesome like an Apple product. That is how awesome it is.
I was contemplating Cogmap’s home page today and how I could change it to make you love Cogmap more. (Cogmap is both severely under-resourced and was created pre-good tools for split-testing, so no other home page has ever really existed.)
Here is my story:
One of the great things about Apple marketing is that all they do for marketing is show you how to use the product. When people go buy an iPhone, they already know how to use it because the commercials they saw that made them want the iPhone trained them how to use it.
The Cogmap home page is fairly similar in that way. It does a great job of showing you what the product does and how to use it – it’s usability, much like a good Apple product, is its best feature.