Micropayments probably won’t save small publishers

The online publishing world is currently grappling with (and/or panicking about) the rise of widespread ad-blocking. Ad-blocking software is deeply problematic, because at its core, it’s essentially a classic shakedown scheme: offer your services to readers by vilifying advertisers and hyping paranoia about “tracking” and “malware,” and then turn around and charge advertisers to “whitelist” ads that they find acceptable.

It’s hard to fault readers for not wanting to see ads that are, at a minimum, annoying, and can quickly eat up mobile bandwidth (as beautifully illustrated today by this NYT feature). On the other hand, publishers need a business model to create content people like. Ad blockers have various forms of rebuttals to this argument, most of which amount to shrugging and saying that isn’t their problem.

One alternative that you see often proposed has to do with direct reader micropayments. “Let me pay directly for content,” the argument goes, “so you don’t have to rely on ads for your site!” This is certainly an interesting idea — indeed, it’s one that has been debated, experimented with, and ultimately rejected for a long time. I have one such experience that, I hope, might prove illustrative.

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Ecommerce: Gradually, then suddenly


boosterThe way we’ve come to understand the role of ecommerce in the broader consumer/retail economy has evolved pretty remarkably over the last ten years. In many ways, the rise of ecommerce resembles the proliferation of consumer mobile devices, a trend best described by Hemmingway: “gradually, then suddenly.”

Somewhere in the late 2000s, we went from a slow, gradual adoption of the internet to a tipping point, where we accelerated rapidly to 3+ billion people online today. A big part of that is due to the maturation and commoditization of mobile technology. More people got online to access a certain bundle of goods there: information, services and products. As those things improved in quality, it drew more people online. A virtuous cycle that happened gradually, and then suddenly. We’ve moved into the “suddenly” part now, as another billion (!!) come online in the next year or two, which is part of why Google and Facebook are investing so much money in welcoming those new users to the internet.

Ecommerce has grown tremendously, but its growth has so far been gradual. As a percentage of overall retail sales here in the U.S., it’s still in single digits – but growing at a steady clip. Yet this growth pattern drastically understates its potential. Ecommerce is quickly approaching its own “suddenly” function. And I think the day is getting closer when we’re going to see a major shakeout in retail between those companies that are prepared, and who “get it,” and those that do not.

I’ve given some thought here about what that shakeout might look like.

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Collision Course

shipsOver the last few months, I’ve been meeting with a lot of folks working in ecommerce at major retail brands in North America. There’s been a ton of interest in the Shopping Index reporting my team at Demandware has been working on, particularly as everyone begins their holiday campaign planning. The Index is a project to apply analytics reporting to the incredible amount of ecommerce data that flows across the 1,300+ retail sites on the Demandware platform – you can read more about it here.

Since I joined Demandware, I’ve been struck by the many similarities between the digital analytics and ecommerce platform markets. These are both fast-developing markets whose clients – small, mid-sized and large companies, mostly B2C but also B2B – are seeing most of their new growth, if not all of it, in digital rather than brick-and-mortar. As a result, these companies are racing to adopt new technology to support that growth, which often leads to painful and awkward change in their organizations.

I’ve noticed that, over and over, when I’ve been talking with ecommerce teams, the conversation begins squarely in ecommerce and gradually drifts towards… something else. Part marketing, part commerce, part customer experience, part “digital intelligence,” if you want to call it that. Ecommerce folks are constantly referring back to topics I used to talk about while at Coremetrics – contextual marketing, using data to inform merchandising, leveraging browsing and search data, and so on.

For someone whose tech career has been built in the technology of how people buy and shop online, this convergence is… interesting. And it has given me some clues about where the industry is headed, probably sooner than we think.


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Oracle and Maxymiser

Today, Oracle announced its acquisition of Maxymiser. You can read the press release here.

This is the 7th acquisition by Oracle for its “Oracle Marketing Cloud.” (Check out my running tally of Marketing Tech acquisitions.) While not Oracle’s largest by a wide margin, I think this acquisition actually says a lot – both about Oracle, and the direction for the “MarTech” field as a whole. I have another blog post brewing on that topic….

Broadly, though, relevancy is becoming the new table stakes across a broad swath of industries. Retail, as usual, leads the pack. Maxymiser gives Oracle a whole new set of capabilities around optimizing user experiences that Eloqua and Responsys didn’t, and as Oracle looks to challenge Adobe and the others in that lucrative market, building out their strength in this area was a must. In that way, you could see this acquisition as the keystone of their marketing technology strategy – Oracle can now offer cross-channel delivery of promotions, products, and content, and the optimization thereof, by use of a very high-quality and market-tested solution in Maxymiser.

I would guess that Oracle, as usual, outbid a small number of other suitors for Maxymiser. I have a pretty good idea of who those suitors might’ve been (though no privileged information there), but you can figure it out with a quick Ghostery check. Per usual, Oracle’s extended ROI timeline – if they are even held to an ROI timeline! – probably allowed them to offer a better deal.

My next post, which I’ve been cooking for a while, is going to deal with what I see as the endgame for MarTech. It’s coming. And probably sooner than we think. More soon.


The long tail of enterprise software

If you follow tech twitter long enough, here are a few things you will learn:

  • How expensive housing in the SF Bay Area is
  • What Blue Bottle coffee is (actually, you will want to go try this)
  • There are all these on-demand services that sound kind of cool but probably aren’t available where you live (outside of a few major metros)
  • There are certain political red lines in tech that you must not cross publicly or you are a terrible human being
  • Seriously, the housing in SF is a nightmare

Just as it is Silicon Valley-centric, the tech twittersphere is also extremely startup-centric. In a lot of ways, this is really cool: you get the sense of seeing the first contours of the future as they’re being built. On the other hand, I’ve found that the mainstream tech commentariat has remarkably little of value to say about management in large companies. The VC/startup industrial complex glorifies practices that are kind of cute or interesting but totally impractical for any organization of appreciable size: transparent salaries, “flat” organizations, a focus on user experience as the acme of product strategy, constant rotation of job duties in the company, and so on.

This reflects a lack of appreciation for the legitimate struggles of traditional industries, particularly big companies in them, to adapt to technological change.

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Status update: is the election over yet?

I thought I would give an update on a little side project I’ve been working on lately.

A while back, I decided to try to level up my coding skills. I was already pretty handy with javascript and basic web design, but I hadn’t really broken ground on anything new in a long time. As tends to happen when you specialize deeply in one thing for a while, I hadn’t picked up my head to look around for too long. I felt like I was overdue for some exercise, and wanted a new challenge.

I scrupulously avoid talking politics here, but I’ll make an exception here to describe my project.

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Small beats big – some thoughts on digital infrastructure

Some friends of mine are starting a small business soon. It’s a really cool idea, and I plan to help out with it as I can. As we talked about it on a hike this morning, it occurred to me that a lot of key factors that make the venture viable would not really have been possible until very recently. By taking advantage of free or very low-cost technology services (primarily in regards to distribution, marketing and commerce), they will be able to bring this awesome new product to market. Who knows where it could go?

roadsI’ve actually been thinking a lot about infrastructure lately. Public infrastructure, as one example, has always been a hobby horse interest of mine. We have tragically under-invested in public infrastructure here in the U.S. over the last few decades, which is directly harming our national competitiveness and economic growth even as borrowing costs are at historic lows… but others have written much more eloquently than I can about the importance and challenges of public investment in roads, bridges, ports, telecommunications, etc., so I won’t go into that here.

Infrastructure socializes costs and allows users to privatize most of its benefits (minus obvious costs in the form of taxes). In this way, much infrastructure is inherently more valuable to smaller constituents than big ones. If you could afford to build your own road to bring goods to market, then a public road is still a useful option as a cost-savings measure, but maybe not a must-have; but if you’re a small producer, then a public road is likely the difference between bothering to produce (or invest) in the first place or not. Good infrastructure makes critical steps in value creation easier and cheaper.

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Measuring up – on evaluating performance

I have seen numerous performance evaluation systems throughout my career. Few, if any, of them have struck me as very effective. Most seemed to lack basic fairness or a meaningful connection to anything outside of the evaluation system itself. More often than not, they were motions we went through because someone said we were supposed to.

Old school #measure

Old school #measure

In business school, you learn that the way most companies do performance evals is completely bonkers. There are many reasons why. A big one is that most humans just aren’t very good at evaluating others’ performance, particularly on intangible tasks (which, of course, defines many knowledge workers’ jobs). It also turns out that most people are extremely uncomfortable evaluating others at all – let alone in person, and least of all for people with whom they frequently interact. Psychology research is legion with repeatable examples of how tiny, random environmental influences – “priming” – can dramatically change people’s perceptions and moods. (Protip: have an annual review coming up? Arrange it somewhere bright and yellow.) Humans simply cannot escape our psychology, which makes us notoriously unreliable.

Yet despite all this, performance evaluations exist, as they should. Some employees do contribute more than others. Companies need a way to identify and reward top performers and help lower-performing ones improve (or leave). Inevitably, compensation and promotions are involved as well, making fine distinctions about who contributes what, and how much, highly desirable. And of course, you can’t forget the role performance evaluations have as legal CYA when it comes to disgruntled employees.

Figuring out how to accurately measure, forecast and improve employee performance in a complex organization is incredibly difficult. Virtually no one has solved it – certainly not me. Yet drawing the right conclusions about performance is the difference between rationally managing your company’s precious resources, versus relying on emotional whim and political wrangling.

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Why Users Aren’t Customers

You can always count on the New York Times to sell eyeballs with Serious Opinions about the chattering class’s moral panic of the day. True to form, they published a red meat op/ed today on how internet platforms like Facebook, Google, Instagram and Twitter are diabolically making money with their users’ data, thereby corrupting democracy and otherwise destroying the world. Instead, says UNC’s Zeynep Tufekci, “Internet sites” should all build direct subscription options for their users that would allow them to opt out of “tracking,” enable encryption and be treated as a customer, not just a “user.”

This idea is completely unworkable. But understanding why requires you to understand what Facebook – and other social platforms – really are, and what they aren’t.

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