DM CONFIDENTIAL – Our industry has struggled with many things. The performance marketing and cpa network in particular continue to fight for legitimacy and prove that businesses in the space offer a long-term value proposition. The reason it struggles is because time and again, it seems as though companies in the space say one thing but do another. Companies will talk about the commitment to quality, but what the advertisers receive doesn’t always match the promises made to them. It’s not always intentional, but there have been more than enough cases where it has. Compounding matters, some advertisers happily turn a blind eye as well in order to hit certain volume goals.
A race to the bottom. That’s how we have often described the behavior of many performance marketers. The cycle starts out innocently enough. Someone figures out an ad and traffic placement that works. Before long, someone else notices that ad and traffic placement. They want to get it to work, and often that means creating a daring headline, a more risque landing page, and/or an unexplored traffic source. Once that person figures it out, the next person comes along and does the same. From here on out, it’s all about outperforming the last guy on clicks and conversions. It’s hard work, and the quickest way is to start saying “whatever it takes.” Of course, once one person starts doing that and getting away with it, another does too and so on until the entire space starts to be called into question.
Is arbitrage to blame? Perhaps. We have long held that arbitrage isn’t in and of itself evil. The desire to make money profitably simply drives people to take risks they might not normally take. They try to minimize financial risk with something that is harder to quantify right away, e.g. reputational risk, legal risk, etc. Here’s the quandary, though. Some of the biggest companies today had the luxury of not caring about money – most notably Apple and Google. While we don’t know the stats, we suspect more big companies than not don’t always have the luxury of not making money. What our space has not been able to find yet is that middle ground.
Excluding Apple and Google for a moment, just about everyone needs to make money (especially now). As we type this, we are having a chat with a lawyer whose firm just folded who says, “I am now working three different jobs. This is not what i want for my life! I want a real business that doesn’t have to pertain to law. This [setup now] is just a means to an end. I need to make $.” This lawyer might not be one to write deceptive ads, but as he states, the work today is not the work he wants. And, if the work today starts to pay the bills, the chances of doing the work he wants diminishes almost daily. Life then becomes just keeping and potentially maximizing what is in front of us. That is true for this person and for those in our space. They may not start out wanting only a short-term business, but the short-term drive to make money has them hyper-focusing on continuing to earn that money, making it ever more difficult to change courses.
Is there a solution? We’ve been toying with an idea for quite some time. What we need is a way to dedicate corporate profits towards concepts that will drive long-term value. It’s very hard for a single company to do this. Google famously gives employees some percentage of time to work on projects that don’t pertain to their specific job. It’s a real-time way of creating longer-term value, not so easy to do in our industry, not so easy to do in general. Just picture two people fighting. Each has their point of view. They are practically beliefs. As each argues their point of view, what are the chances that they will find common ground? Slim to none. That’s what it is like to be in a short-term mindset to make money. You just can’t slip out and do both sides.
Doing something you love often means having the time, and really money, to focus on solving the problem first, worrying about the money later. Our goal is to create an investment fund using short-term profits to enable those working on long-term goals. The fund would be dedicated toward investments in technology and markets that would unlock more business for the performance marketing space, all while giving those in the fund first look access and inside information about the latest technologies. Taking things to the next level would include assigning mentors in different disciplines to the startups being funded to help move the needle on their businesses and ensure better returns. The result though is that 80/20 where companies can continue to focus on what works while having a stake and option in the future. That’s our dream at least. To use today’s proceeds to enable the next generation of performance businesses that don’t have to get their start by simply needing to make money. That enabling of solving problems first is what we’ve been missing.
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