The Breaking Point
Reading that the mortgage banking lead generation vertical might be showing increased signs of contraction will worry some people and have others pleased. For those who make their living off the vertical, they see the potential for lesser returns; others rejoice and the prospect of seeing fewer and fewer sausage animals and other generally bizarre ads blanketing the net. As is the case with any change, some will see challenge whereas others will see opportunity. For certain segments in the online ad industry, we have hit not just a tipping point, but a breaking point.
Perhaps, the violence in the Middle East has indirectly contributed to the slightly dower tone and somber theme. Article after article tells of the massive growth that still exists online, and they are right. But, the truth is that just because a company does well today doesn’t mean that it will do well in the future. No one needs me of all people to remind them of this, but as I believe we have started to transition into a maturity phase of online advertising, I feel others should start to consider their plan if they haven’t already.
The days of easy money are not gone, but the landscape for the easy dollars has shifted. This has happened before with many channels of online advertising from email to adware. If done properly, each can add value to advertisers or users, but if abused, companies not only wind up out of business, but in a selfish way, they end up hurting everyone else left behind trying to make a living through value added service, not value detracting ones.
Lots of factors contribute to this tipping point. The web has established itself as more than just an accountable advertising medium. Besides high broadband penetration, it has attracted a group of users where connectivity replaces couchtivity. Try as I might to understand them, they simply do not need the TV in their life the same way I have. Advertisers and those who rely on advertising have more than started to realize this too, much quicker than I did. I waited until Sidekick came out with a third version before I jumped on board.
The question for companies today is knowing who you are and what your strategy will be. Last week, I grouped those in the interactive space into four main categories – Opportunists, Evolutionists, Incrementalists, and Developers. The first, opportunists are like those that saw the initial popularity of the first T-Mobile Sidekick or the Apple iPod and found a way to make money servicing the demands of those clients by building little and investing little in the long run – it’s a group that just dumped whatever else it was doing. The second, Evolutionists are more akin to those that might not have jumped right away to the Sidekick / iPod economy but they looked at their business and made a radical change to service this new audience but did so without starting from scratch.
The Incrementalists are those who didn’t make any radical changes; they stayed about their course. An example would be those who made accessories for other electronics and decided to support the Sidekick and iPod. They were smart enough to see the opportunity and realize that it didn’t take much for them. The last group, the Developers, they created the Sidekick or the Bluetooth headsets that now work with it; they had an idea that in many ways would either work or it wouldn’t. They had a vision, put in the resources, and will be among the most successful of all four but have the highest failure rate.
The breaking point is really the counter to any tipping point, the electron to the proton. When times change, some make it and some don’t. Much like an infomercial, the caveat here is that past success does not guarantee future results. But you can’t expect to survive, let alone thrive, if you don’t know who you are, what you do well, and what you want to do. Those that have figured these things out, those who have built their businesses with a solid core will bend when a breaking point occurs. Those that don’t, will break. Our companies are like planes and times of fundamental shift online are turbulence. Well designed planes can handle turbulence, the wings and fuselage meant to bend, shake, and flex. Well designed companies can do the same and still make their destination.
