Over the years, the rise of search, social, video & mobile tidal waves have upended the traditional role of the closer, or Chief Revenue Officer
When studying finance at college, sales was almost a dirty word. For beer money, I worked as a customer service representative (CSR) at Royal Bank of Canada’s VISA department. I actually loved the service industry, but it was typical for somewhat cocky business students (in particular the finance one) to think serving clients was beneath them. I loved being a CSR, mind you, I conducted myself like I was RBC’s CEO or its ombudsman, even though I was serving credit card clients who would call to vent about overdue fees, refused charges, and so on. My passion for the job and desire to please made me a pretty good rep, scoring a 149% productivity ranking (i.e. 1.5X the average) but what made me proud was when irate clients would come around and end the call being happy. One day, a client said “you’d be very good at sales,” I thanked him, but like my fellow classmates, I thought to myself “me, sales?” as if it was – at least subconsciously – beneath me. I’m not proud of having felt that way, but it was common for students who felt entitled to a career in banking and consulting, then the holy grail out of business school (in the subsequent decade, this would change for venture capital, hedge funds and private equity).
Birth of Search
Life had different plans. In early 2000, I landed a front row seat in startups in the search industry at Mamma in the early days when Google was in beta. Google was the 13th search engine. Before it came directories like Yahoo!, Altavista and Looksmart, as well as search engines Excite and Lycos who morphed into portals by the late 1990s, for there was no money in search.
By late 2000, I navigated into online publishing at AskMen. My title was “vice-president of corporate development,” but effectively I was doing a mix of public relations and writing. Within a month, when I asked about the company’s finances, I learned we didn’t have much sales, so to avoid ending up working at a failed startup, I took up sales. The dot com bubble would soon burst and before long, 9/11 would make the ad market crumble (for another take on 9/11, read Insecurities: The Persian). Undeterred, I sold display ads, text links, even helping (along with many others at the time) pioneer what would come to be known as branded content and native advertising in our own way integrating sponsors into articles (with proper disclosure). Fast forward to 2005, I’d published 1000 columns, interviewed an array of newsmakers and celebrities ranging from Joe Montana to Hugh Hefner, but for the sake of this story, sold some $10M+ in ads and played my part in convincing SF-based IGN Entertainment to acquire WatchMojo for $13.5M. It wasn’t a home run, but based off a $500K investment, it wasn’t shabby… especially since our main competitor TheMan had raised $17M from Lycos founder Bob Davis’ Highland Capital, only to crash shortly thereafter. Amongst the 3 C’s of the Internet, we’d bet on Content, them Commerce. We’d played the long game, they sought to put “nine women in a room and have a baby in a month.” Sometimes it’s better to be long-term greedy.
The Old, New Way of Selling Ads
I won’t get into the selling of ads in newspapers, magazines, radio or television. I’ll focus on my experience during the 2000-05 era.
The “racket” at owned-and-operated (O&O) websites was the typical playbook: 1) produce articles, 2) publish them on your website, 3) adopt i) white hat search engine optimization (SEO) tactics and 4) then sell ads against it. Ideally, sell them direct to marketers and ad agencies, but once our traffic soared to 5M unique users who generated some 200 million page views, rely on ad networks to increase the fill rate. We had a very good marketing/SEO team which led to organic traffic growth. Coming from search, I introduced ii) search engine marketing (SEM) tactics at the onset of the sector: I would buy quality traffic for $0.01 on GoTo (then renamed Overture) and then Google (for more than that, $0.05 I recall) before the world caught on and inflation set in. I probably should’ve followed my gut and bought Google shares at the IPO, but was in the trenches making money the old way. Either way, our inorganic traffic growth came from our old-school iii) “business development” deals with AOL and MSN (Yahoo always proved elusive, though I’d seal that deal later at WatchMojo) who would a) feature the headlines of our articles on their main pages, b) house the first half thereof on their portals and c) then drive massive amounts of traffic to our websites.
No Respect: Comscore & Nielsen
As with all publishers, despite our internal logs and eventually Google Analytics (Urchin for the old-timers), we’d suffer the indignity of being knee-capped by Comscore and Nielsen who’d systematically discounted our internal traffic by about 50-75% (in our case, it seemed like a demonic 66% haircut, fittingly). Nonetheless, aggregating traffic one could control and sell was… simple.
As the 13th search engine, Google won search through a perfect storm:
When Google introduced text ads for publishers to add to their website, it showed an openness from Mountain View to share the spoils. Indeed, I’ve always viewed Google as a positive force online (though with power that becomes… more complicated) who recognized that 1) by driving away search traffic it would grow its own traffic (people would return to use its search engines) and 2) by sharing ad revenues, it would grow the ecosystem. Sure, Google was akin to the house in a casino, but the odds were somewhat less egregious and in fact, quite fair (jokes aside, without Google and YouTube, it’s hard to argue I’d have the same level of success professionally. Chalk it up to good timing).
Rise of Social: 2006
Eventually, Google’s search dominance gave way to the rise of social, which had seen a first wave via Tripod, Geocities and Angelfire in the late 1990s; and now in the second half of the 2000s first Friendster, MySpace, and of course, Facebook. Facebook in particular changed how users found content, through sharing instead of search’s discovery and recovery method.
Emergence of Video Platforms
But it was Facebook’s precursor MySpace that actually paved the way for YouTube, since users on the then largest social networking site were embedding YouTube videos on the site. For that reason and others, YouTube emerged as the winner in video due to its own medley of variables:
While Netflix had taken programming we previously saw on TV and theaters and brought it into the convenience of your home, YouTube was a revolutionary maelstrom that redefined Hollywood as we know it.
It was this series of events that redefined sales, forever.
When I started WatchMojo, it coincided with the Web 2.0 craze, and in some ways RSS, or Real Simple Syndication, nearly “killed” business development. People didn’t call each other and send proposals via email. They didn’t hop on flights and pitch partnerships. Developers would create XML-based RSS feeds which others would embed. This effectively served as the junctions of data, products, and ads. As early as 2007, we’d outlined in How To Make Money In Online Video that the future of video advertising would be (via investor Fred Wilson):
1 – Microchunk it – Reduce the content to its simplest form.
2 – Free it – Put it out there without walls around it or strings on it.
3 – Syndicate it – Let anyone take it and run with it.
4 – Monetize it – Put the monetization and tracking systems into the microchunk.
Google’s AdSense Became YouTube Adsense
My third book expands on YouTube’s rise in depth. In the context of the CRO role, YouTube’s playbook (vision) and game plan (execution) wasn’t flawless, but it was unstoppable.
When investors would then ask me what the future would look like, I would point to how inasmuch Google’s acquisition of Sprinks and Applied Semantics created an economic marketplace for all keywords (and over time, you coudn’t buy much for $0.50, let alone $0.05!), over time its acquisition of YouTube would create a similar economy around videos. While preroll ads were not, in of themselves revolutionary, Truview’s skippable ads proved to be a scorched earth policy that killed the competition by starving them of much-needed ad revenue by making the job of CROs harder: marketers demanded to pay for ads audiences watched, which is why YouTube became revolutionary, it didn’t only empower creators, it empowered audiences in giving them the power to watch anything on-demand, but also sit through ads they wanted to watch. I recall having lunch with one of YouTube’s competitors’ CEO in that third bucket as he could do little but watch YouTube gobble market share.
How Investors Misread and Misplayed YouTube
So much money went into funding so-called YouTube competitors while so few funded YouTube-ecosystem companies (like WatchMojo, which set its sights on the once-in-a-generation-opportunity and turned a small investment into the conceptual version of ESPN and MTV on cable).
Venture-backed firms in our cohort group never loved the idea of building their brand on YouTube, I felt this wasn’t a matter of choice and went all-in, as YouTube became one of our four big bets. In doing so, we built massive reach, serving 150 million viewers per month in 150 countries, when you include YouTube, Snap, Facebook, Twitter, TikTok, and our website.
In some ways, no matter what kind of content you bet on, you couldn’t go wrong since a rising tide lifts all boats, though clearly some content catalogs are more valuable than others. However, by realizing that geek culture would replace pop culture, we nailed platform/format fit.
Tech Frenemies: Google vs Comscore/Nielsen
By virtue of being owned by Google, YouTube’s always been unfriendly terrain for technology companies (relative to content producers, whom YouTube ultimately needs). Ironically, many multi-channel networks built businesses on top of YouTube, but those MCNs who survived did so via content and IP (like Studio71) or technology (like BroadbandTV). But for companies like Comscore and Nielsen, YouTube and Google have proven to be frenemies. For Google to fulfil its destiny and siphon the lion’s share of television’s billions in ad spending, it needs to out-maneuver the traditional ratings agencies in the near-term while out-smarting them in the long-term.
The Uppercut? Programmatic Advertising
Of course, given the endless supply of inventory, there was no way for mortal CROs to match the machines. Programmatic – the automated buying and selling of online advertising through targeting of audiences and selection of publishers – further undermined the traditional CRO’s role when walking into an ad agency, especially on platforms. MCNs like Machinima had reach on YouTube, but by building an army and competing head-on with YouTube ended exactly how you would think that would end.
The combination of 1) distributed traffic on 2) video platforms with 3) the shift of programmatic proved to be an unsurmountable 1-2-3 combination that put even the best of CROs on the ropes. This is why our larger comparable Buzzfeed eventually de-emphasized (both in terms of operations and public relations their distributed traffic, I think):
For a heavily VC-funded firm like that, you have little choice but to sell direct to marketers. For us, YouTube was a no-brainer:
This is why I flipped the model on its head and didn’t hire sales people until 2015: as the GM managing payroll, I poured every penny into creatives to create a catalog, embracing a field of dreams approach by deficit-financing content audiences loved, with the caveat that the three constituencies wanted different things:
The CRO’s Salvation?
The best executives and entrepreneurs convert weaknesses into strengths, channel threats into opportunities. When the YouTube adpocalypse hit, suddenly brands and agencies were willing to pay a premium and take the extra steps to ensure their ads appeared next to brand-safe content. Indeed, the assurance of brand-safety and quality placement won over some marketers… but with ad agencies cutting resources and being asked to do more with less, it was like trying to make the globe spin in the opposite direction: wishful thinking. This may have slowed the trend, but it won’t override it.
Mobile Takes Off: Serenity Now!
By the mid 2010s, the triple martini lunches and boondoggles in Cannes or CES were becoming less important than these “new ways” of doing business.
Mobile delivered the final blow. To quote Jerry Seinfeld: “Why would I put a show on a big heavy rectangle in your house when I could put it in your pocket?” It was always a matter of time before the Web would topple television, but we seemed to blink as mobile surpassed desktop traffic; though in hindsight, it was a matter of when, not if.
Content Arms Dealers
Today, the role of the CRO has changed dramatically as companies seek new revenue streams. A CRO needs to understand analytics, data science, production in an era where the platform for short form content – YouTube – is now seeing long form-programming grow fastest on connected TVs via over-the-top (OTT) devices while new belligerents like TikTok are also driving the need for shorter, mobile-first programming. But mainly, because of the power of the platforms, CROs have to be diplomats and service-minded more than showmen.
Covid: Knockout Punch?
Inasmuch as the 2007 Lehman-led econocalypse and great recession accelerated the demise of newspapers:
I think Covid will accelerate the shift of TV ad dollars to the Web, for without/less live sports, it’s hard to imagine audiences slowing down their shift online and mainly, marketers feeling the nostalgia to stick to television. That said, with a massive $75 billion up for grabs, the best CROs will find a way to always be closing.
What’s the conclusion as you build your career and business? Study yesterday’s playbook, but the game is constantly changing, so play with your own game plan suited to your strengths and comparative advantage, especially as we’re now entering a new world order.