If there’s one thing learned during the first .com boom and bust, it’s this: revenue and profitability count.
You can’t build a successful business without revenue, and you can’t sustain a business without profit.
Despite the froth that remains on the consumer internet, it’s undeniable that many of today’s startups are focused on how they can make money.
For some, the desire to make money encourages the development of a business model before there’s a real business.
Take for example AdKeeper, a startup that had raised north of $40m based on a single concept: allowing consumers to ‘keep‘ digital ads of interest, much the same way many have cut out an ad from a newspaper or magazine.
In an opinion piece on AllThingsDigital, AdKeeper CEO Scott Kurnit wrote:
The problem with online ads is that they try to interrupt when we’re
busy doing something else. Content is our primary purpose for visiting
sites; the ads are secondary. So, AdKeeper is designed to help people
who want to engage with advertising as a primary activity–later, when
they have time.
AdKeeper lets users Keep ads anytime they see the K. No pre-registration, no set-up, no software, no downloads, no browser extensions, no plug-ins – nothing. Click. Kept. Period. Click the K and they continue whatever they were doing. Do it over and over. Then, whenever they’re ready to engage with their Kept ads, they just click through any K, on any ad, anywhere and they’re delivered to their personal, private Keeper.
Perhaps there was something to “TiVo for banner ads“, but if you don’t think this was the best idea ever, you’re hardly alone. As detailed by BetaBeat, AdKeeper ‘pivoted‘ last month, although it should be noted that Kurnit disputes that. In any case, the company is now trying its luck with allowing consumers to follow their favorite brands.
Whether the company will find success with that remains to be seen, but there’s an observation to be made here: AdKeeper apparently didn’t have much of a problem getting advertisers to buy into its original concept. Its launch partners included notable brands like AT&T, Volvo, BestBuy, Kraft and General Mills.
Yet like me, chances are you haven’t ‘kept‘ an ad, and probably wouldn’t be inclined to do so if given the opportunity.
Even so, it’s not difficult to understand why advertisers were ‘sold‘ on the concept. As Jason Lowe, a marketer for restaurant chain Wendy’s, told The New York Times when AdKeeper launched, the company had offered Wendy’s the ability to jump on board at a miniscule cost. “If it does take off and consumers show this is something they want, then
we’re here on the ground floor. And if it doesn’t take
off, it’s a relatively low risk opportunity for us, so we thought why
not give it a shot?” he stated.
Which highlights an important point for any company trying to deliver consumers to advertisers in some fashion: selling advertisers is easy if you have the right connections and/or a decent pitch, but that doesn’t mean that delivering the goods (an audience or engagement with tangible ROI) will be.
From this perspective, the notion that startups should try to get advertiser buy-in before they have a proven ability to acquire and deliver users in a meaningful way sort of dies on the vine.
Yes, you don’t want to be that startup that becomes wildly popular and can’t figure out how to monetize before it runs out of money, but lining up the advertisers before you have the audience and engagement model is hardly a recipe for success either.