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  Deep Thoughts at Seth's place

Transparent Bundles, whose tagline is "Somewhere between Wall Street and Madison Avenue lives the future of both." has some deep posts on the nature of the internet - using computer science terms like automata.

They [ad network players] capitalize on a behavioral blindspot, where the supply of inventory versus the demands of advertising value are disjointed. As consumers become smart about these artificial mechanisms (banners, keywords, freeipods) their effectiveness drops and they look to get acquired by larger media entities.

Translation: You can make a lot of money very fast by getting customers to vendors efficiently. However, what works today won't work for very long...

As the Internet medium continues to evolve into a sales channel, the price of advertising is becoming mapped algorithmically to probably outcomes. Very little is being left to chance, as even the most ephemeral of creative decisions (color of the car in the banner, the choice of text in the link) are immediately evaluated in terms of click-thru rate.

I think these are good points, even though the references to PageRank and CTR seem out of date to me. We're still in the upswing on the PPC ad trend, because most buyers are not measuring their cost-per-lead. When the majority do measure that, then the overall PPC ad market will start to look efficient, and the trend will be on the downswing, as the cutting edge people look for the next inefficient place where outsize returns occur.

Back to Seth's tagline. I agree with the ad market and the stock market having the same nature. But I think Madison Avenue has a long way to go before it reaches the efficiency of Wall Street. In the financial world, the time value of money is the heartbeat of the markets - Seth's "automata" dance to it's beat. In the ad world, the heartbeat of the market is the acquistion cost of customers. That's what the music behind the waltz is. However, out of the $250B ad market, I'd guess that only less than 5% moves to the beat of automatable, accurate metrics.

PS - Seth Godin also has deep thoughts, I just happened to be referring to a different Seth... They probably know each other, though, so I think they'd be OK with it.


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