If you’re read my rants for long enough, you know I’m fond of programmatic advertising. I’ve called it the most important artifact in human history, replacing the Macintosh as the most significant tool ever created.
So yes, I think programmatic advertising is a big deal. As I wrote in the aforementioned post:
“I believe the very same technologies we’ve built to serve real time, data-driven advertising will soon be re-purposed across nearly every segment of our society. Programmatic adtech is the heir to the database of intentions – it’s that database turned real time and distributed far outside of search. And that’s a very, very big deal. (I just wish I had a cooler name for it than “adtech.”)”
In my last post I imagined a world in which large data-driven platforms like Amazon, Google, Spotify, and Uber are compelled to share machine-readable copies of data to their users. There are literally scores, if not hundreds of wrinkles to iron out around how such a system would work, and in a future post I hope to dig into some of those questions. But for now, come with me on a journey into the future, where the wrinkles have been ironed out, and a new marketplace of personally-driven information is flourishing. We’ll return to one of the primary examples I sketched out in the aforementioned post: A battle for the allegiance – and pocketbook – of one online shopper, in this case, my wife Michelle.
It’s a crisp winter mid morning in Manhattan when the doorbell rings. Michelle looks up from her laptop, wondering who it might be. She’s not expecting any deliveries from Amazon, usually the source of such interruptions. She glances at her phone, and the Ring app (an Amazon service, naturally) shows a well dressed, smiling young woman at the door. She’s holding what looks like an elegantly wrapped gift in her hands. Now that’s unusual! Michelle checks the date – no anniversaries, no birthdays, no special occasions – so what gives?
Algorithmic merchandising leaves a bad taste in my mouth. Slowly but surely, it will erode trust for all the tech giants.
Yesterday, I lost it over a hangnail and a two-dollar bottle of hydrogen peroxide.
You know when a hangnail gets angry, and a tiny red ball of pain settles in for a party on the side of your finger? Well, yeah. That was me last night. My usual solution is to stick said finger into a bottle of peroxide for a good long soak. But we were out of the stuff, so, as has become my habit, I turned to Amazon. And that’s when things not only got weird, they got manipulative. Sure, I’ve been ambiently aware of Amazon’s algorithmic pricing and merchandising practices, but last night, the raw power of the company’s control over my routine purchases was on full display.
There’s literally no company in the world with better data about online purchasing than Amazon. So studying how and where it lures a shopper through a purchase process is a worthy exercise. This particular one left a terrible taste in my mouth – one I don’t think I’ll ever shake.
A recent piece in the Harvard Business Review entitled The Promise of Blockchain Is a World Without Middlemen lays out the case for decentralized networks in evangelical language. As the author writes, “Decentralization offers the promise of nearly friction-free cooperation between members of complex networks that can add value to each other by enabling collaboration without central authorities and middle men.”
But is it a given that such a world is what customers really want?
The Job of the Middleman
Middlemen make for an easy target for disgruntled customers and observers of the economy. At times it can be unclear how they are adding value to a transaction. Sometimes it looks like middlemen are simply inserting themselves into a transaction to increase costs and take a cut.
When you decide to take your company public, you buy into a system that is far, far bigger than you. And as much as you may want to change the system, as a public company, you have to focus on your business and your shareholders first. That’s the law, enshrined in all corporate governance documents.
Now, governance can be rewritten, and Etsy, subject of a major Times profile this past weekend, had done just that. Before it went public, Etsy was a B Corporation, but as it prepared for the public markets, it decided to forgo the most stringent part of B Corp. certification — enshrining itself as a “PBC” — a public benefit corporation. Publicly traded PBCs are rarer than unicorns — there’s only one, Laureate Education, and, well, its stock isn’t exactly encouraging others to join the fray.
And: Ethics in business follow ethics in government, Valerian follow up…
For a short item in a daily newsletter, my post on Google and Amazon’s feed-driven ambitions brought some outsized email responses my way. Suffice to say, people in the industry are paying close attention to the topic, and that got me thinking a bit more about where this all might lead. Given it’s Monday, and the news is a bit slow, indulge me in a bit of speculation.
Here’s the headline: I predict Walmart will attempt to either partner with Instagram, or to invest in (and partner with) Pinterest. Or both.
Many companies enter the fray for possession of the coveted default seller position on Amazon pages — the seller you end up choosing when you click the big orange “buy” button — but only one can win. Since an estimated 85 to 90 percent of the sales for a given product page go to the winner, it’s a consequential choice. In Buzzfeed, Leticia Miranda lays out how this struggle has evolved, and what criteria Amazon uses to resolve it.
The answers are to some extent opaque: Amazon won’t detail its formula for fear it will get gamed, but says companies can win by “keeping prices low, updating their inventory, and offering multiple shipping methods and fast, reliable service.” Also, it helps if they are Amazon Marketplace veterans and if they ship from Amazon warehouses.
Amazon is the first destination for most US consumers searching for products online. For venture-backed startups building direct-to-consumer brands, Amazon is often an afterthought. They fear ceding any level of control over the brand narrative and customer relationship, the core drivers of brand value. However, it’s becoming increasingly perilous to ignore Amazon.
Kelsey McGillis Interviews Matt Mayes, Director of Data Intelligence, Welcome
Why use KPIs when you can use KVIs? Welcome’s Head of Data Intelligence Matt Mayes spoke with us about value-based design, a new approach to data analysis that gives businesses a better look into why you are seeing specific results, and how to improve. It focuses on Key Value Indicators (KVI), which go a step further than Key Performance Indicators, giving businesses a clear path to act on the data mined.