Why do businesses (advertisers) have to pay for placing their ads? Why do they need intermediaries to reach potential customers? Why does advertisement, in itself, not have a business model? Why is advertisement always part of someone else’s business model (revenue channel)?
The answer to these questions is buried in a seed called “push-based attention” that condensed ads to merely being a conduit for grabbing our scarce attention and becoming nothing but a product’s cosmetic visual derivative.
A couple thousand years ago:
The advertisement was designed to strike engagements rather than to grab attention. Ads were products in themselves.
A craftsman never paid for placing his ad: the distance between the craftsmen and the “cavemen” was within the same neighborhood. As such, there were no distribution costs.
Unfortunately, technological development during those days didn’t allow “engagement” to germinate in a fertile environment. The scale was impossible from an economic viewpoint.
A thousand years later:
A new model emerged, known as middlemen or “ad agencies.” They planted the seed of push-based attention.
· The shift from engagement to push-based attention meant further reach: distribution costs were inevitable (donkeys and horses to take ads wherever potential cavemen might reside).
· The craftsmen got lots of attention and lucrative trades: paying a fee was justifiable.
A few thousand years later:
The ad agencies’ push-based attention started to show a diminishing return: Cavemen no longer were interested in ads. Over time, their tastes elevated, and they were craving other content: arts, sports, news, literature, etc.
As such, a new business model emerged, “Media Businesses,” which leveraged the push-based attention by bundling content with attention: news and entertainment bundled with the advertisement.
The media businesses consolidated the distribution channels (e.g., printing presses, broadcast licenses, radio airplay, movie theaters, cable channels, etc.) and where necessary, integrated backward to control the supply side of the economy, marginalizing ad agencies. Controlling the demand side’s attention was a matter of time; as such, they introduced taxes on ads: the deeper the craftsmen’s pockets are, the further they can reach.
Back to our present days:
Along with the internet, a new model surfaced: the platform-based model, “platforms/aggregators.” Empowered by the realities of modern economics, those platforms were able to penetrate the entire surface of the long tail.
They democratized the supply side, enabling any caveman to create content. As such, they hijacked the media industry’s monopoly on the flow of data, and they allowed almost any craftsman (irrespective of their pocket size) to place ads and get in touch with an expanding caveman population.
They focused on elevating cavemen’s experiences; as such, cavemen kept migrating to those platforms, leaving advertisers with no other channels but to follow their footsteps.
Apparently, advertisers are convinced that paying ads’ taxes is their destined reality; the only way to squeeze their ads into cavemen’s social graph (in stories on Facebook, newsfeeds on Twitter, search results on Google, videos on YouTube, etc.) is to target every niche and every vertical.
But, what if this reality is flippable? Instead of placing a commercial layer on top of the social layer, what if we can place a social layer on top of the commercial layer?
Freedom of Ads:
As long as those platforms are in full control of the data flow (attention’s chokepoints), they will be an existential threat to advertisers; they can cut anyone from their grids (exchanging lucrative revenue for evaporated attention is not a fair proposition). No middlemen should be entrusted with cavemen and craftsmen’s economic destiny. It is time for a new pathway: cavemen’s economic migration to a “Pull-based Ad Platform.”
Customers deserve a new economic architecture: an open centralized operating system for their economic graph. Likewise:
- Google for being the online search’s operating system;
- Facebook for being the social connectivity’s operating system;
- Amazon for being the retailing operating system.
Customers, too, need an operating system for their consumption: An economic architecture that can redefine production’s subsidization, experiences’ elevation, interactions’ commoditization, modularization, differentiation, and network chain integration.
Now that we can envision a new reality, we only have one step before diving into the platform thinking domain: we need to reimagine an ad as a product, rather than merely a derivative of a product, and as a destination rather than a vehicle.
When ads are viewed as stand-alone value propositions, then subsidization is easy to think of as follows: subsidization means divorcing ads from conventional metrics (e.g., return on investment, customer acquisition costs), as such, becoming free (free flow of ads). Likewise:
· Google’s search is free;
· YouTube’s videos being free;
· Twitter’s tweets being free.
Ad subsidization can be a reality once we are able to view (ads) them from Clayton Christensen’s lenses: the Jobs-to-be-Done theory. What might be an ad’s job to be done? What is the job an advertiser hires ads to do? Perhaps educate, reach, target, support, improve, facilitate, compete, promote, increase, encourage, attract, expand, and/or motivate.
Different jobs have different underlying economic rationales and various distribution channels: knowing ads on such a granular level is a prerequisite for applying platform thinking.
Onto the Platform Thinking
Let us start by taking the Platform Eligibility Test, which is a simple diagnostic tool that aims at excavating a deeper level of understanding of the units of economics: economics of production, distribution, and consumption.
If a product can be digitized through the above stages (production, communication, purchasing, delivering, and consumption), it will no longer gravitate to the conventional economic rules. Ads are eligible to enter the exponential era.
- Ads can be produced digitally; thus, the supply curve will be empowered by zero-marginal costs;
- Ads can be communicated and delivered digitally; thus, ads will enjoy almost zero distribution costs;
- Ads can be purchased and consumed digitally; thus, ads will benefit from minimal transaction costs.
When such economics forces intertwined, ads can be detached from a centralized value chain and be integrated into a more extensive network chain: migration of value creation from a centralized platform (return on shareholders) to an entire ecosystem (return on coreholders), in other words, liberating ads from taxes. As such, it will be easier to reconfigure the whole ecosystem:
- What can be replaced, raised, or created on the supply side?
- What can be replaced, raised, or created on the demand side?
- What can be done to the logistics? (e.g., eliminate/reduce dependency on 3rd parties)
- What infrastructural changes can be applied?
For a long time, the logics behind advertisements evolved around controlling:
- The means of production,
- The distribution channels, and
- The attention scarcity.
The future of advertisement is not about “control.” It will be about nurturing “Engagement Desirability.” Unlike the former three logics (production, distribution, and push-based attention), which share a common characteristic (all being zero-sum resources), engagement desirability is not.
Those platforms (via the push-based attention) are not competing with each other; they are in direct competition with their users: the opportunity cost of being on Facebook for one minute, does not merely mean not being on Twitter; it means being away from family, kids, work, etc. (Not sure if competing with your customers’ time is a rational business proposition).
Platform Narrative
To shift advertisers’ mindset towards the engagement desirability, they must embrace an opportunity-based narrative (a concept theorized by John Hagel). The narrative must enable customers to experience:
- consumption being liberated from push-based attention,
- engagement desirability as the new rule of engagement, and
- experience improvement via pull-based attention.
The Platform Narrative Framework is designed to help in visualizing how to align the core-holders’ forces towards enabling and unlocking opportunities in a much broader context — beyond the reach of any individual player.
The core-holders must understand:
- Why is it in our best interest to join the platform?
- What can we accomplish by joining the platform versus not being part of the platform?
- How should we connect with other stakeholders within the platform’s ecosystem to significantly enrich our experiences?
Every experience on the platform must be designed (e.g., every function, feature, filter, feedback, notification) to amplify the platform’s narrative. For example:
- How will the platform leverage its data through its infrastructure to help customers to make prudent decisions?
- How will the platform aggregate the right experiences of third-party professionals and match them (via a robust curation mechanism) to benefit the customers?
- How will the platform expose advertisers to a spectrum of the new customer base?
The narrative must manifest that the real value to customers is to enable them to get connected to and to be engaged with a much broader range of expertise and resources.
Platform Value Proposition
The Platform Value Proposition Canvas is designed to help in understanding how platforms can amplify value creations: enriching the core value proposition, by enabling multi-core interactions to take place within different layers — where each layer operates under different ideologies.
The Jobs to be Done (“J2BD”) Layer: This layer is the entry point. Advertisers will place their ads to fulfill customers’ jobs. However, it is the customer who decides when and where to engage with ads. Likewise, when you click on:
- LinkedIn (scroll up/down) for professional/work-related content;
- Twitter (scroll up/down) for news content;
- Facebook (scroll up/down) for social content.
The pull-based ad platform will enable customers to scroll up/down ads content. Welcome to your Ads’ feeds.
The J2BD is about findability, security, privacy, transparency, and accessibility.
Findability — today, if someone want to know the latest news, most probably S/he will click on Twitter rather than Google. So why we still must go through Google for our consumption? This layer will do what Twitter did for news. Almost zero-friction exists between you and your jobs to be done.
Security — one dashboard (accessible to only you) that securely consolidates your consumption history and search history.
Privacy — full ownership and control over your economic graph (consumption history, searching history, recommendations, likes, comments, complaints, etc.).
Transparency — a complete set of information (substitute products, complementary products, competing products, social feedback, etc.) appears to you to support your consumption decisions.
Accessibility — personalized dashboard with a centralized interface that enable you to interact directly with venders, producers, retailer, etc.
The Context to be Shaped (“C2BS”) layer — In this layer, the value proposition is not about ads, nor customers’ jobs to be done. The value proposition at this layer gets elevated to meet customers’ specific contexts. This layer is about achieving more: internalizing the core-holders’ collective experiences to enrich their specific contexts.
Within this layer, you can create your economic groups (alike WhatsApp’s social groups). You can share, import, export, and exchange unique commercial experiences. Next time, when a friend asks you where to go for his vacation, with one click, you can export to him the relevant (full details) specimen of your economic graph’s DNA.
Experiences within the C2BS can be bundled, merged, coupled, emerged, overlaps, etc.
Creation to be Empowered (“C2BE”) layer: In this layer, the value proposition is about endless possibilities, such as harnessing and amplifying serendipitous experiences.
At the C2BE, the personalized dashboard intertwines with the economic graph and social graph. Your dashboard can become your virtual shop, showroom, commercial map, etc. When you buy an item, it will immediately appear in your virtual shop with full details (location of the shop, price, discount, etc.). It becomes part of your economic graph’s DNA.
Platform Longevity Growth
The Longevity Growth ideology pushes the core-holders to explore untapped opportunities that may rest beyond their immediate domains (looking at customers’ totality of experiences).
The “growth” in longevity growth encompasses several value-creation layers (i.e., economic, knowledge, geographical expansion, customer discovery and acquisition, etc.).
Hiking Example:
Do you remember the hiker in the above example? He found and bought hiking shoes via the passive layer. (His consumption got recorded into his economic graph.) Then via the active layer, he shared his economic graph with his friends to invite them on a hiking trip.
Underneath a simple consumption act rests a rich layer of interconnectedness (not via contractual obligations) via shared aspirations. Businesses at the interactive layer can extract actionable data, information, and knowledge from intersecting ecosystems.
Network Chain
Industries can be shaped (fragmented & consolidated) via different underlying ideologies:
- Unbundling (at the product level);
- Disintermediation (within a supply/value chain);
- Decoupling (at the customers’ level).
I would like to suggest that industries can be shaped via a new ideology: de/re-linking (at the Network Chain level).
Disruption looked at the supply side, decoupling looked at the demand side, and the de/re-linking will look at the collective behavior of both sides in real time. De/Re-linking aims at leveraging the core-holders’ totality of experiences.
The network chain can proliferate the value proposition within the longevity growth different layers by internalizing the economic graph’s network effects and externalizing the social graph’s network effects. The overlaps between these different network effects will lead to the Network Effects Arbitrage: the instantaneous hop-on-hop of from different network effects within different ecosystems, in order to take advantage of capability building opportunities across multi (visible and invisible) touchpoints.
To do so, we need to unbundle the platform into three distinct businesses-stacks: a concept theorized by John Hagel in Unbundling the Corporation.
Next, each business-stack must be distinguished in term of the nature (modular or interdependent) of their touchpoints with end users and the ecosystem. In other words, colliding Hagel thinking and Christensen thinking.
Tightly integrated touchpoints enable a new form of data, information, knowledge, and experiences portability, and interoperability. A business might be in direct competition with other business at the passive layer via a modular touchpoint, yet they can fully collaborate under the interactive layer via an interdependent touchpoint. In other words, pushing revenue from the modular interface in the passive layer into the interdependent interface in the interactive layer.
Engagement is the entry point at the passive layer. However, engagement in isolation is too narrow of an ambition. Within the active and interactive layer, the pull-based attention model will redefine the meaning of engagement.
Unlike the push-based attention, which is merely cosmetic marketing (wrapping a product with audio, video, text, color, music etc.), the pull-based attention addresses customers’ core needs, and more. Between adjacent jobs to be done rests tremendous (untapped) space of value creations, and the network chain can leverage John Hagel’s Infomediary concept (introduced in Net Worth) to amplify the Leveraged Edges.
Platform Margin-Remonetization
Margin-Remonetization aims at reconstructing the foundation of the monetization framework from its grassroots. The platform monetization framework must actively strengthen the integration between the platform’s value chain, end-users’ value chain, and the network chain.
The Margin-Remonetization ties between two distinct trajectories: the value chains’ trajectory and the network chain’s trajectory. If the monetization framework is inclined unjustly toward the value chain, the platform’s gravitational power for retaining existing users or attracting new users gets weakening.
The Margin-Remonetization is a new form of ownership, a new way of dividend distribution. Every single dollar invested in this pull-based Ad platform will be utilized to benefit the corholders:
Advertisers
Advertisers will no longer pay for placing their ads, nor for accessing the platform; instead they will pay annual subscription fees in return for achieving and co-creating endless opportunities.
Customers
Customers will not just own their data; they will monetize their data by selling, trading, and/or exchanging them.
Platform Governance
Legal formation, incorporation, and establishment are not a mandate of this post. Yet, there is no harm in seeding a wild idea.
Conventional legal formation will not work with such an aspiration. We need to envision a wholly new structural model. Maybe try a Protected Cells Platform: legally protected compartmental networks of regionally incorporated platforms (each region is protected from the geopolitical backlash).
A complete decentralization of ownership, rewards, and governance involves a shift from the shareholding model to core-holding model. There is no more consolidation of voting power via capital injection. Let’s stop here. The seed has been planted.
Platform Governance Canvas
Scaling the quality of the coreholders’ experiences through governance is inseparable from the coreholders’ ability and willingness to collaborate and deliver values: striking an equilibrium between coreholders’ interests and the ecosystem’s evolutionary trajectory.
As such, Platform Governance Canvas is designed to stand as a dynamic x-ray of the health of the coreholders’ experiences: consolidating the coreholders’ voices into one visual (language) map, which can direct the governing authority’s attention to where it should be: allowing a platform to learn from the richness of its data flow.
In a nutshell, governance at the age of platform must extends its merits beyond the technical principles of good corporate governance (company formation, board compositions, voting powers, etc.), and be fixated on balancing the rights, authorities, and responsibilities among the coreholders, while enriching the platform’s ecosystem.
Platform Measurement Framework
With ads being free, absent of shareholders and decentralization of rewards, conventional business metrics wouldn’t be that useful:
- If ads are free, then there is no point of measuring Return on Investment;
- If shareholders don’t exist, who needs to measure Return on Shareholders?
- If rewards are decentralized, why bother to measure Return on Assets?
As such, we need a new ideology for performance measurement: the Measurminator concept.
In a nutshell, the Measurminator refers to a zooming-based measurement approach that intersects two different dimensions: Once again, conjoining Christensen thinking with Hagel thinking.
Theory-based measurement aims at understanding the causality between our actions and the yielded results. To focus on the theory behind the subject matter “Jobs to be Done.”
Horizon-based measurement aims at rigorously stretch and stress-test the theory-based measurement into multiple horizons: stretch the jobs to be done, to extract different experiences, and to proliferate and converge them to shape new contexts and reality.