Progency for Martech: The Missing Link (Part 4)

Ads made (too) Easy

When I was running IndiaWorld in the late 1990s, Samachar was our most popular site, followed by Khoj, Khel and Bawarchi. Our revenue model was ads. While one approach was to sell banners based on time, I quickly realised that it was quite inefficient because the same ads were shown to a repeat customer base. I then decided to build a software solution to rotate ads and price based on exposure (CPM, or cost per thousand). I called the solution “Khojnet” – my own early version of an ad network software that ran across all the IndiaWorld sites. This change in the way we served ads got us more advertisers and drove higher revenue from the same traffic.

Khojnet was built out of necessity. In those days, we could be thought of as an early version of a progency: the product was Khojnet, and we were selling space like an agency. Khojnet gave me an advantage over others who sold banners based on time. It was one of the secrets to making IndiaWorld profitable and later, a “proficorn”.

Of course, over time, the adtech industry evolved very rapidly. Performance marketing is the norm now and programmatic ads rule the roost.

As BigCommerce explains: “Performance Marketing is a combination of paid advertising and brand marketing put together, but only paid out once the completed desired action takes place. This win-win marketing opportunity for a retailer or “merchant” and affiliate or “publisher” allows both parties to truly target campaigns in a strategic, high ROI way, all based on performance. By paying the affiliate or publisher when a specific action is completed, a merchant can feel confident that their money is being well spent since they are already converting their target audience before they pay for the transaction.”

Digital Marketing Institute writes: “Programmatic ad buying is the use of software to buy digital advertising. While the traditional method includes requests for proposals, tenders, quotes, and negotiation, programmatic buying uses algorithmic software to buy and sell online display space. A sophisticated way to place advertising, it uses traffic data and online display targeting to drive impressions at scale which results in a better ROI for marketers.”

Performance marketing ensured that the cost of advertising moved from becoming an expense to a cost of sale. As long as a business was getting a paying new customer, it became easy to justify the cost of advertising. Programmatic provided the extra impetus and brought in more spending.

As with all good things, this has gotten overdone. What marketers forget is that their own customers are also constantly being targeted by competitors to switch. So the bucket is leaky – many of the new customers being acquired are actually reacquisitions of churned customers, and some of the new customers are also less valuable. Marketers have trapped themselves into a digital arms race, where the only winners are Google and Facebook, with some crumbs for the agencies. This is what I call the “doom loop” of ad spending.

Published by

Rajesh Jain

An Entrepreneur based in Mumbai, India.