Opinions

Why Our Industry is a Mess

Posted by Jason Burnham on March 13th, 2013 at 11:29 am

For those of us in the digital media trenches, it is very easy to see just how dysfunctional our industry is. Although, sometimes it is challenging to understand why or the best way to resolve our problems. I believe we are starting to get at the root of what is actually going on. Through our work with Burnham Marketing over the years, in combination with the recent work we've been doing with MindTime, some very important issues have come to light. A few years ago, John Furey (CEO of MindTime) did a luncheon keynote Q&A at AdTech and introduced the MindTime model and framework to the digital marketing and advertising community. Prior to this session, we requested that attendees take the MindTime profile so that we could reference it for demonstration purposes. Although, what we learned was a bit shocking!

Upon reviewing the results, we noticed that the majority of our industry is comprised of Past and Future thinkers. There were barely any Present thinkers. The skews were dramatic. To put this into some context, it is Future thinking that drives innovation, the launch of new companies, creativity, sales, and coming up with the "big ideas". Past thinking drives validation and most likely comprised of our industry’s research, analytics, and data management. However, it is the Present thinking that excels at client services, account/project management, strategic planning, operations, systems integration, time management, privacy/data management, process, work flow, budgeting, scope of work, etc. Most of the problems our industry is encountering are due to a lack of the right Present thinking attacking these needs.

This is not the first time we’ve encountered a situation where there was a lack of one of the primary forces of thinking. Allow me to take you on a brief journey to the not so distant past. I believe some of you reading this will recall the Bubble Burst of 2001? For those of us who were actively planning and buying digital media at the time, we saw that bubble coming a mile away. In our offices, we would sit around scratching our heads, not understanding why VCs were pumping so much money into companies that had very little end user or end buyer value. Yet, millions and millions and then billions of dollars kept getting pumped into non-sense. The parties were great though. Anyone remember the Urban Box Office party on Ellis Island? But I digress.

Now, let me add a bit more clarity here. At the time, we were a couple of years into the launch of our first agency, Mass Transit Interactive. We were young (early-mid ‘20s), new to corporate America, and naive to how the market really worked and what justified a company to be positioned for funding and receive a high valuation. We were just young, ambitious entrepreneurs with enough vision to see that the Internet was going to change the world forever. And the sooner we got in, the better position we were in to establish ourselves as industry leaders and ride the wave. We could care less about Wall Street; we saw the value in Main Street. The Internet was changing our lives and we knew it would for the masses as well.

So, the question is, why were a couple of young, naïve, kids from the music industry able to see we were on the verge of an economic collapse driven by the .com boom, when highly educated investment bankers, MBAs, and seasoned businessmen appeared clueless? We just assumed they knew something we didn’t. Some would say “greed” was at the center of it all. Yes, there was plenty of greed, but I believe much of the fundamental reasons for our collapse had to do with the dysfunctional distribution of the primary forces of thinking at work.

The MindTime wheel of collaboration tells us that in order for a company to function properly, you must have a balance of Past, Present, and Future thinking. Future thinking for ideation and innovation; Past thinking for research and validation; and Present thinking for integration and execution. Many entrepreneurs will have an innovative idea for a product or service and want to be quick-to-market to gain competitive ground. Meaning, they would very quickly go from innovation to execution, with little to no validation. Back in the late ‘90s, the Internet was growing at such a rapid pace; VCs did not want to miss out on an opportunity. “Opportunity”. This is a word I would prefer to use, rather than “greed”.

This was a new industry emerging with no historical track record to drive educated and informed decisions. VCs invested based on the “opportunity”, “hope”, “enthusiasm”, “optimism”, and “vision”, sold into them by the young Future thinking entrepreneurs. Opportunity, hope, enthusiasm, optimism, and vision are all Future thinking attributes. Validation would be determined once the product/service was in market. Well, the market definitely validated in 2001 alright.

In order to minimize risk and to assure there is a market for a particular product or service, the wheel of collaboration must move from innovation, then to validation, before integration. We are beginning to see this issue resurfacing again today. A few years back it was with ad networks and now it’s social, apps, DSPs, etc. Granted, given the current economic climate, VCs are being a bit more conservative with their investments and spending some time validating value proposition prior to funding. Unfortunately, every marketer’s needs are different and the marketplace has gotten so fragmented that it is nearly impossible to perform a true competitive analysis and market needs assessment to determine if the company they are investing in really stands a chance to be embraced, adopted, and have the ability to scale large enough to yield a profitable return. As a result, investors just hedge their bets by funding a dozen companies. If one takes off, it covers the losses of the others. Great for investors, but a horrible practice for the success of our industry and economic sustainability.

While it may appear we are heading down a similar path as the Bubble Burst of 2001 based on all of these crap companies cluttering the market with little to no real value or competitive differentiation, it is just the tip of the iceberg. I feel there is a perfect storm heading our way and it is time for us to change course. We have much more to fear. Not only are we missing strong Past thinking where it matters most – in market needs assessment and competitive differentiation – but we are also now lacking strong Present thinking.

Because our industry lacks strong Present thinking, we are starting to witness a breakdown in our infrastructure, resulting in marketers not being able to properly assess the market, evaluate their needs, how to evaluate digital services and capabilities, or manage project scope. This is putting pressure on agencies to drive down their compensation, which requires agencies to become more efficient in order to sustain profitability. In many cases, fees have been negotiated well beyond the point of being able to achieve any kind of margin, regardless of how efficient you are.

Although, because agency management tends to lack strong Present thinking as well, they lack the resources required to build the necessary operational structure required to maintain profitable margins. “Efficiency”, “effectiveness", “structure”, “organization”, and “process” are attributes of Present thinking. This is causing poor coordination and collaboration, compressed deliverables timelines, an under-valued scope of work, and an inability to capitalize on their innovative strengths. They are focused on the “opportunity” without understanding what is needed to manage a profit yielding digital practice.

This directly impacts publishers/media/technology providers. It is no secret that the sales efforts are falling short as a result of not being able to get the attention of marketers and agencies to demonstrate their value since meeting with sales reps has become the lowest priority for agencies. Time management restraints, coupled with the fact that Future thinking is saturating the already cluttered marketplace with too many companies trying to sell similar products/services is resulting in a lot of false-value creation from all sides of the digital media management ecosystem. It is difficult for companies with real value to shine through. This is why media planning and buying is quickly becoming commoditized and migrating towards automation, even if it is not the optimal solution for a brand’s marketing needs.

Since our industry lacks the necessary Present thinkers to properly build out our infrastructure, we are running a very high risk of a breakdown in our entire ecosystem. Good media planners and strategists have a high composition of Present thinking; which is starting to be replaced by trading desks and dashboard analytics. Automation minimizes the amount of planners and strategists an agency will need. Don’t get me started on how ineffective our automated solutions currently are. Hell, we are not even using the right metrics and constantly justifying what is and isn’t an invasion of privacy. It’s no wonder consumers are starting to negatively react. And now agencies are starting to cut client services and account management positions? Really?!? The only few Present thinking people left at the agencies and now you want to let them go? But then, that’s the problem with the Future thinking entrepreneur; they thrive on risk and hope, are resistant to structured process and regulation, and make decisions without the necessary validation. I am a Future/Present thinker. I have always prided myself on my strong Future thinking. Now, I embrace my Present thinking more than ever. And apparently, it will be in high demand if we maintain our current course.

I could go on and on about the problems our industry is facing, but this would quickly turn into a book, rather than a post. Everyone is to blame and it is the responsibility of everyone to fix it. If you capitalize on the fruits of digital media, then you have a responsibility to protect it. From VCs, to start ups, to media and technology providers, to agencies, to marketers; we have all become drones focusing in on the wrong problems, rather than hiring the right people to fix the real problems our industry faces. Let’s learn from our “past” and not make the same mistakes again. In the words of Albert Einstein, "We can't solve problems by using the same kind of thinking we used when we created them."

One Response to “Why Our Industry is a Mess”

  1. We performed a couple of studies through iMedia and AdTech to assess the dynamics of the thinking system of the digital marketing and advertising industry, using the MindTime framework. We sampled several hundred individuals across the industry in a variety of positions to assure we had a representative sample of the industry universe.

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