Slicing the Bean.

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There’s an old black and white cartoon from the 1930s that has two hobos settling in for a meal together.  After they set out plates and tie napkins around their skinny necks, they attack the main course:  a single bean, which they carefully slice in half and eat rather contentedly.

I’m reminded of this image when I see the online ad landscape slide created and popularized by investment banker Terry Kawaja of GCA Savvian.   Terry graphically and articulately lays out the dozens of sectors and hundreds of companies that make up the service and data chain between the marketer’s online ad investment and the dollars gathered by sites.  A central premise in his argument is that this process middleware (my term) is severely overcapitalized, and that the players there are all in competition to further dissect the relatively paltry online display space of today.  Like the two cartoon hobos, they’re not finding more food, simply making a big show of slicing the bean ever more finely.

I think that in our rush toward creating ever more process intelligence (data) and efficiency (targeting) we’ve gotten a little lost.  Investors,  marketers, agencies and media companies have stopped asking a very fundamental question of each new entrant into the already-overcrowded middle:  “How is what you do going to create new online wealth?”

It’s as though we all took the wrong lesson away from the record success of Google and the inevitable success of Facebook.  Each of them created something of value that was fundamentally different and new, something that spiked usage of the medium (Facebook driving massive, always-on usage)  or that brought significantly more dollars online (Google’s self-serve buying model aggregates zillions of dollars of mom and pop spending ).

The industry doesn’t need one more data source that’s going to refine targeting by a quarter of a point.  Nor do we need another technology or platform to shave a nickel off the CPM.  We do need great companies and products that are going to create new hours and new dollars in the space. There’s a time to sow and a time to reap.  The time for slicing up the bean is over.

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