Monthly Archives: February 2013

Next Step for Ad Tech: Product Data Innovation

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We’ve reached the most granular level in online advertisement targeting technology: an SKU to an impression. So where will the next innovation come from? I’m thinking the next big step in ad tech will be on the product side, helping advertisers pick which SKU to show a particular impression, at a specific bid price.

An impression is more than just the age and gender of the person. It is the person at the exact time and place. It includes the demographic, psychographic, and geographic information, the taste, mood, and everything about who the person is, adjusted for the context of what she is looking at. We probably can’t combine all those data for a given impression yet, but we’ve made a lot of progress in painting a picture of this person at the exact state in time.

What about the SKU side? When an impression shows up on a website, how much should an advertiser bid on this impression and more importantly, which product should he show?
I believe an impression has a fair intrinsic value that is a function of the predicted click through rate, conversion rate, the average order value, and how much % of sales the advertiser is willing to pay, adjusted for risk. In a formula, this looks like this:
image

I’ve outlined my thought process in a previous entry, found here.

My question is, of all the advertisers that are bidding on impressions, how many are looking at the product side on a data driven way? By data driven, I don’t mean “this product is designed for single urban males who like cars”. I mean “analyzing all the transaction history involving this product, the calculated CTR & CVR of this impression is X & Y, with standard deviation of Z”. The point is, advertisers are choosing which product to show without the rigorous past purchase analysis that should point them to the optimal SKU to show at the optimal bidding price. If you sell hundreds or thousands or even millions of SKUs how can you be sure that the ad you decide to serve is the best one in your product portfolio? Also if you are not amazon or Walmart do you have enough data to really make an intelligent decision?

The next innovation in ad tech will effectively collect these purchase data across merchants and transform it in a way that is useful to advertisers. With information asymmetry out of the way, advertisers will bid on impressions based on predicted CTR, CVR, and AOV. So what will win an impression when multiple merchants are selling identical products? It is the % of sales the advertiser is willing to give up thus ensuring the publisher will get the maximum $ for the impression. The user who will see the ad will see a calculated, optimized ad, which should match his profile so well that the ad will be less of a distraction and more of a content. Of course the advertiser who was willing to pay the most will get to show the ad, so we have a win-win-win situation between the user, publisher, and the advertiser. Moreover the product side innovation should drive automation even further. Ultimately, a user showing up to a website will trigger a process that will sift through millions of products across advertisers to find the optimal one. That sounds like a more efficient market to me.

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Strategy Means Nothing without Operations

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” A vision without action is just a dream; an action without a vision just passes time; a vision with an action changes the world.” ~ Nelson Mandela

Substitute the word “vision” to “strategy” and “action” to “operations” and that’s your business quote of the day.

I like to use a bicycle analogy to talk about what strategy and operations are, and how they relate to each other. When you are riding a bike, you are performing two main tasks. Steering and pedaling. Obviously steering is strategy and pedaling is operations. In order to get to your destination quickly, you need both components performing. It is much easier to steer a company that is already pedaling well. When you try to shift the strategy of a wobbly bike, you risk falling flat on your face. Strategy means nothing without the operations to back it up.

So, what does it mean for a strategy to be backed up by operations? It means your resources are shifted towards the strategy. At the most granular level, it means your sales person is calling prospective client A rather than client B. It means your account manager is creating an additional slide and product manager is adding a few lines to the requirements document. Management is shifting some members from one team to another. In short, strategy is only effective when action takes place.

In a corporation, the way to ensure these actions happen is by reflecting the strategy into the budget. When you look at a company’s budget there should be a storyline. The numbers next to the line items needs to illustrate how the strategy is to be executed. If you can’t read your strategy in the budget, it’s not going to happen.

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カルチャーはトップダウンで決まる

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(当ブログ内の英文記事をざっくりと翻訳して掲載しています。)

企業のカルチャーはトップダウンで決まります。どれだけ前向きな社員が集まっていたとしてもリーダー層の言動に反してよいカルチャーが根付く企業というのは存在しません。良いカルチャーはメンバー達にとってほしい行動をリーダー層が模範して示す場合にのみ築けます。リーダーが「なぜうちのチームは文句ばかり言うのかが理解できない」と文句を言うのは筋違いそのものです。

なぜでしょうか?人は基本的には成功したいですし、成功するためには自身の行動をある程度改めることができます。(もちろん例外な人もいますが、そういう人が組織内に入り込まないようにするのは採用の最低ラインです。)どれほどガツガツするかは人によりますが、大体の社員は昇格したいし、昇給もほしいものです。社員は上を見て自分もどのようにしたらよりよいポジションに就けるのか観察し、学びます。上位層が政治的に動き、評価されているのを見ると下位層でも同じような行動がとられ、政治的なカルチャーになります。逆にリーダー層がチームワークや誠意を見せ、評価されているのを見るとメンバー達も同様な行動をとり、良いカルチャーが醸成されます。

リーダーとして、よいカルチャーを築き上げたいと思うのであれば、末端層の行動を変えてもらう取り組みを考える前に、まずは自分自身と周りのリーダーの行動を見ましょう。組織全体のカルチャーを変えるために行動を変える必要がある人はトップのごく一部なのかもしれません。

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Personnel Announcements as Communication Vehicle

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In the past couple of days, I talked about why office politics suck and how corporate culture is set top down. What’s also really interesting is HOW culture is communicated throughout the organization.

The strongest messages from management to employees are delivered through personnel announcements. Promotions, demotions, disciplines, dismissals, transfers, etc. The message is stronger than any presentation or training because it is REAL.

We’ve all seen promotions that makes you say WTF? But there is a line of thinking and justification behind every single personnel move, and that is a manifestation of the leaders’ values and a representation of the corporate culture. No one ever gets accidentally promoted. Some may get an undeserved promotion, but even those are intentional.

A personnel announcement is essentially a list of who’s getting rewarded and who’s not. Team members know their leaders and fellow employees, and they share information amongst themselves. They know WHY each of the personnel changes took place or didn’t take place and this common understanding creates the foundation of culture. So if you want to create a certain culture in your organization, be careful of who you surround yourself with, because no matter what you say in your new employee training, your actions will speak a lot louder.

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The Guess Why I’m Crying Game

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I have a two week old daughter. Yes she’s a bundle of joy and is without a doubt the cutest thing ever. She is also a very calm baby compared to others. But raising a baby is like playing a game of “Guess why I’m crying?”.

Here are the rules of the game for a newborn. I assume these will evolve as the baby grows and learns more curve balls to throw at you.

  • Baby will start crying. This can happen 24/7.
  • You have to guess why she is crying
  • She is either hungry, sleepy, in need of a diaper change, hot, cold, uncomfortable, in pain, gassy, burpy, in need of a hug, in a bad mood, or just messing with you because she can
  • If you get it right and take the proper action you win and she will quiet down unless she decides not to (because she can)
  • You cannot adjust the volume, in fact, she will cry louder as she grows
  • You don’t have an option to not participate in this game

Of course it’s all worth it. Except when you change her diaper and immediately she decides to poop while sitting on your lap. And then starts crying.

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