Rinse and Repeat Only Works in the Shower

Posted by Darren on Dec 2, 2008 • (Comments)

After the introductory Tweets, he gets down to business. At Microsoft, he says, there must be a shift from the traditional model of software to what he calls software plus services. As slogans go, it’s not particularly catchy. But the sentiment is clear: Just packaging software, collecting the money, and then producing a new version a few years later (whether people want one or not) is no longer a sustainable business plan.

The relationship with customers must be constant and continuous. Instead of discrete onetime transactions, the money—whether from subscription fees or advertising—will flow constantly. For the user, everything will happen when it’s needed, as if pulled down from a cloud. The metaphor has been around for years, along with the more recent spinoff, cloud computing. But the phenomenon is anything but ethereal. Billions of dollars are at stake.

Ray Ozzie Wants to Push Microsoft Back into Startup Mode, Wired-16.12

Very important line above:  Just packaging software, collecting the money, and then producing a new version a few years later (whether people want one or not) is no longer a sustainable business plan.

Also important:  Instead of discrete onetime transactions, the money—whether from subscription fees or advertising—will flow constantly.

While reading Wired Magazine on the ride home, I stumbled upon these paragraphs as part of the larger Ray Ozzie (MSFT Chief Software Architect) story.  While one could read this article quickly and only relate it to software, I looked at it with a lense filter of the advertising industry.

Media agencies have been purchasing digital media in roughly three different capacities:  direct to site, thru ad networks, and across multiple ad ad exchanges.  Agencies typically rely on these partners to provide media placements to reach specific audiences.  An Insertion Order is signed and a campaign runs.  One off, a campaign at a time, rinse and repeat.

Ray Ozzie rightly is forecasting the future, IMHO.  While Ray is talking about MSFT and software, I think this applies to the digital media/advertising world (amongst other industries).  While ad networks are being disintermediated, the value that they provide us are innovation around targeting and audience analysis.  Soft data, i.e. MMR, MRI, Simmons, Quantcast, ComScore, etc, is now being combined with actual audience results in near real-time, which is drawing partners closer with agencies and brands.  This should open up a constant flow of information (and dollars) between brands, agencies, and vendors.  Because of this, the future may hold less media plan partners for agencies, but tighter integration between them.

While I discuss ad networks mainly above, I think the role of the entire ecosystem of advertising is affected.  Thoughts?

Tagged as , , , , + Categorized as Advertising & Marketing
  • These are very impotant points that you have highlighted. the title is so appealing and justified. I have become a fan of this post.
  • totally agree that tighter integration is in the cards. but i think it will be interesting to see user response to this. especially when it comes to editorial content. users like to know there's a separation between church and state. but advertisers love to be right there in the middle of the conversation. all of this spilled over a while back with gamespot (i think, or some other game review site) where the reviewer wanted to slam a game that was an important advertiser to the site. i guess the difference is MSFT is a two way between the user and the product. with advertising, there's a three-way relationship where users and advertisers often want opposite things, which complicates things (must...refrain...from...innuendo)
  • I completely agree with you. People do the same song and dance each year selling media, wasting peoples time at short-staffed agencies and publishers/networks, while many products and media properties chance little year to year. (How much has deodorant or Maxim really changed recently?) If it were just a matter of keeping advertising subscribers rather then selling a new campaign, both sides could focus on effectiveness rather than sales.

    Adwords has the right idea. They don't ask you to set up a fixed-time campaign (though you can), they ask how much you want to spend a month on search advertising. If it works why would you ever stop?
  • You bring up a point I wasn't originally thinking about re: Adwords and their idea.

    I was thinking about the process not being a pure media sale any longer - it's all about the additional value and tighter integration.
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