1.1.1 Blitzscaling and the Accidental Media Companies
It took television 30 years to go from black and white to colour, yet in a little over five years Mark Zuckerberg took a website called FaceMash to one of the biggest media brands in history. Within six years of launch it was amassing 400 million people a month. Welcome to âblitzscalingâ. A concept coined by Reid Hoffman (co-founder LinkedIn) around the idea of how companies attain explosive growth, lightning fast. It is about doing and building things others wonât, and thinking unconventionally about rules, risk and pivoting. It is a 10% growth per day thing, not 10% growth per year (which is better than most marketers could dream).
Hoffman cautions that the approach is not for the light-hearted. Not everyone has the stomach for this type of thinking. In a high-stakes winner-takes-all game, losing foretells of biblical proportions. Netscape were perhaps one of the earliest examples of blitzscaling, rising to an eye watering US$2 billion market cap in 16 months, but they are also an example of falling hard. Within ten years of its establishment the browser service went from 90% market share to less than 1% in 2006. Regardless, Netscape made its mark on the world.
In the noughties several websites out of the pioneering Silicon Valley went from zero customers to a gazillion in record time. And the value of these customersâ eyeballs was quickly realised. Creating a commercial online media platform became the new business model, even when the original plan may not have been. Zuckerberg famously held back on commercialising advertising until four years after the business began. His initial focus, he claims, was more on connecting everyone in the world and less about the advertising opportunity. He talked about taking on advertising to pay the bills. Sheryl Sandberg, in 2008, saw advertising for the opportunity it was. YouTube, in its youth, was an innocent place dedicated to a small group of creators motivated by their art. In 2006, less than 12 months later, it was sold to Google and advertising monetisation began two years after its launch. Itâs hard to believe, but in the early days Google was opposed to advertising-supported search engines due to the bias it may bestow. Amazon started as an online trader, with a slower evolution to becoming an ad seller. Now it is fast on its way to becoming one of the biggest media companies in the world. None of these companyâs missions have changed, but the definition of what constitutes a customer sure has. They are in the business of attracting the attention of customers and re-selling it.
In less than five years the marketplace was filled with gargantuan advertising opportunities on social, search, video and microblogging. This was the first time in history marketers could easily access global reach in one place; providing an answer to the fragmentation problem of the eighties and nineties. Consequently, over a few short years the shift in advertising spending away from traditional platforms to new media was about as epic as blitzscaling itself.
Not surprisingly, the scale of this disruption has had its consequences on the broader industry. Fundamental shifts are never easy. In 2018, complaints were made to the Australian Competition and Consumer Commission (ACCC) arguing that the digital duopoly (Facebook and YouTube) were ârule bendingâ and should be more closely scrutinised by regulators (as the traditional platforms have been). This included complaints regarding the facilitation of content piracy, lack of transparency for measurement, and data aggregation. These are weighty complaints. The piracy claims were based on platforms not providing any financial contribution towards TV content being viewed on social sites. Data aggregation becomes a problem when critical mass restricts new entrants into the marketplace. But perhaps the most talked about issue in advertising circles is measurement transparency. A lack of transparency over the algorithms, makes it difficult for competition regulators around the world to assess anti-competitive conduct. Since then a USA congressional inquisition expressed concern for privacy and monopolisation from Facebook, while EU countries have launched legal challenges on Google and Facebook for privacy and anti-trust practices.
The point here is to demonstrate that rule bending is a classic blitzscale technique without which these companies wouldnât exist. And this rule bending has literally changed everything about media and advertising (and life as we know it more generally). We have information organisers, video sharers, social and professional networkers, auctioneers and news gatherers all now sitting safely in the media owner category (although for regulatory purposes, some refute that they are). This is a category that has been dominated by a select few for many decades.
1.1.2 Free Reach and Going Viral
The next critical media moment in time involves kittens and babies. Youâve heard it before. Put a cute baby in a video and it will go viral. Kittens on roller skates will spread video content wildly from a small base on the internet through social and email. Unfortunately, the term viral is one of the most grossly misused marketing words today. The term was catapulted by the meteoric rise of YouTube after Google bought the company in 2006. Unlike watching traditional video on TV, users were encouraged to engage in the content by way of commenting, rating, favouriting and, of course, sharing to other users. Now, going viral carries its own identity beyond YouTube and is used for just about any content sharing on any media siteâword-of-mouth on steroids.
As a medical term, viral has been used for at least 300 years, most often during an epidemic to describe the spread of a virus from a single host to many people. Like many marketing terms borrowed from other sectors, viral is loosely understood and even more loosely measured. The concept of going viral is a function of time and the rate of sharingâthe rate of sharing means the ratio between number of views to number of shares. For a video to be truly viral, this ratio needs to present as views < shares. In laymanâs terms, one person views the video which results in many more people sharing. As such, the concept of viral has borne the impression that online video advertising will bring you free reachâthat if we build it (and upload it) they will come in droves without additional cost (or the need to invest in reach at all).
As word-of-mouth on steroids, the viral concept is flawed by the natural shape of content distribution (a reverse J-shape curve). The reality is, and our own extensive work has proven, that the likelihood of a video spreading to millions from a small seed is highly unlikely, and upfront paid seeding plays a bigger role than most people think. Nevertheless, going viral has catapulted us into the world of earned media where marketers are seduced by the free eyeballs lottery. This is the critical media moment in time that turned marketers into gamblers, and like real gamblers they ignore the fact that the odds are stacked against them.
1.1.3 Instant Measurement Appeared in an Instant
The first rule of social software design is that more engagement is better, and that the way you get engagement is by adding stuff like Like buttons and notifications.
James Somers, Contributing Editor, The Atlantic Boston
In the mid-noughties, Justin Rosenstein delivered a masterstroke for Facebook, co-inventing the Like button and single-handedly changing the nature of how we consider advertising success. While other metrics (such as, views, shares, comments, ratings) had been introduced on YouTube a few years earlier, the Facebook Like button was the first time customer approval was directly linked to a brand (as opposed to content) at such scale. In the early days Like was literally taken as being a fan of the brand. In my own research at the time we debunked this myth showing that in an average week less than 1% of the brand fans bothered to return to the page they had Liked. Since then, Liking has become more widespread along with its other engagement cousinsâfollowers, visitors, viewing minutes, reactions, retweets, favourites, watch list, mentions, dislikes, clicks, shares, views, comments and the list goes on (and on). These are all favourite online volume metrics used to measure the success of online campaigns.
But there are no unicorns and glitter in Fight Club. And two highly significant (negative) flow-on effects resulted from the adoption of instant measurement.
First, the rise of short-termism. With easy access, marketers have become addicted to instant measurement (no real surprises there). What this means is that they have switched focus from investing in and measuring, longer term brand impacts. The new focus has prompted fleeting campaigns that see immediate spikes in sales and have easily accessible ROI metrics. Traditional advertising research takes time for a number of reasons, including (but not limited to) the need for complicated experimental and sample controls. Lack of measurement controls means that online engagement...