Common Challenge

Through past 2 months we had a rapid turn-back from startup community claiming it’s invulnerable to weakening economy to startups firing people because of recession. The common argument for invulnerability was a) businesses having actual business models (as opposed to the first .com boom), and b) businesses with ad-revenue, but mostly performance based. The second argument is something I want to discuss.

For past 3 years the strongest point of performance based advertising was the win-win approach - both publishers and marketers had strong interest in advertising actually working. The first group earned more if more people interacted with ad, the second group got more valuable interaction, so it was willing to pay more for it. A perfect situation, both parties playing the same game. Of course many abuses, scams and other forms of violating rules of the game occured but overall the system was far superior to other forms of advertising.

There is a theory (supported by some evidence) that advertising expenditures go up in a weakening economy - based on the presuposition that you need to put more effort into selling those same products. The problem with performace based advertising here, is that people need to interact with it in order to generate revenue for the publisher. This indicates that the customer must be in search for something or ready to buy certain products to notice the ad in the first place (again, relevance used to be another selling point for PBA), and has motivation (and means) to satisfy his need. In a weak economy however, people cut back on everything, and generally are in the ‘not buying’ mode. This means they will not use search engine to look for products, and they will not click on other (no matter how relevant) ads, banners and so on. This way, the strongest point of PBA could also become it’s weakest point in the next 2 years.

There is hope, fear not. The first thing that could happen is the ‘price per click’ could go up, as more advertisers compete for the same place. The other area are branches of economy that thrive in a recession: job seeking, entrepreneurship, financial advice and others. Overall those effects could balance each other. But we have to wait 2 years to find out

I just went to see Andy Budds presentation on “Designing the User Experience Curve” today. I was badly late, but I managed to catch half of the presentation. Afterwards I took Andy, Marcin Jagodziński (of blip.pl) and Michael Sliwinski (of Nozbe.com) to coffee-shop, for what turned out to be a great conversation.

I will not write about the content of presentation, here, but I would like to share some thoughts I had during and after our meeting. One of the questions I asked Andy was should a startup deploy a half-baked product asap, or rather polish it to get the perfect user experience. His opinion was that, granted you have necessary resources, you should always go for quality. He even used the Rio vs iPod example - Rio being first to market by 3 years, but eventually leaving polished iPod to dominate.

We also had a discussion about customization, personalization and user’s tastes. Andy thinks that personalization is very important particularly in social apps - where you can show off with your personalized space. On the other hand, Michael said that we don’t want users to customize our apps too much, because then we can’t control the quality and experience of the user (Andy strongly supported that). Marcin haid his point on that one, coming from Blip’s experiences - that sometimes you have to give your users features that they use anyway, but not in a comfortable way (he used sending pictures over Blip as an example).

The presentation (and conversation afterwards) was highly inspiring, and also a bit humiliating for my ‘design-ego’. Andy really shows a completely different level of thinking about UI and design in general. But this paragraph is not about waxing Andy’s bottom. It’s about how sitting four people at a table can develop the conversation. I’m (by far) not an expert in design. Michael is actually a great marketer (in my opinion), and Marcin is an expert on coding (as far as other people say). Together, with Andy’s expertise we had a great conversation on design (of course), web startup market, VC funding and economy slowdown. My point here is that your knowledge compounds with sharing. So share, People. Share your ideas, expertise and thoughts. Share your dreams. Because sharing is power.

I was just going through my Dooyt work and I realised that the last post was on the 24th of July. This is unacceptable, and I humbly ask for your forgiveness. I will change these poor statistics in coming days. The first post - tomorrow after seeing Andy Budd of Clear:Left in Warsaw Institute of Technology.

Oh, and btw.: Dooyt is going into very-private-beta on Monday