Can you be too transparent?
I don’t think so, but I never went to Harvard or had $1 billion to manage around an algorithm. Google $goog can’t be transparent with their algorithms and had to pull out of China because of it (maybe).
I have been thinking about one of my rants on the financial industry that ‘Transparency is the NEW Alpha’.
You could say the same thing about many industries. Advertising comes to mind. I will come back to that.
Alpha has been the buzzword in the hedge fund industry for a long time. Felix Salmon, always grumpy, had a good post way back in 2006 on the subject of ‘Alpha’ and ‘Beta’. If Al Pacino were making good movies today he would star in ‘AND ‘ALPHA’ for All’:
I am in the camp that Transparency can be your ‘Alpha’. The market will do what the market will do so my ‘Alpha’ (secret sauce) is just being available and not too confusing.
Back to advertising…
As an entrepreneur in the web space, advertising sickens me. It is beyond confusing. While the technology was supposed to simplify things, this idiot would argue otherwise. Of course there are good people, businesses and technologies, but beyond adsense and keyword bidding, little makes common sense. It feels like everyone in media, content and advertising is scared of the real numbers. Furthermore, I don’t think people know what to truly measure. Other than the financial space, there seems to be no bigger industry with a ‘moat’ around the truth, than advertising.
I am hoping that will change. I think transparency is an edge in 2010 and beyond to bring that change.
We need a transparency bubble in advertising and finance and we will get it.
Amen! Advertising legacy was actually noted early in its formation as the famous Department store scion John Wanamaker with the famous line “Half the money I spend on advertising is wasted; the trouble is I don’t know which half.” Now we live in a world where we gaining the intelligence to know “which half” — problem is for media and agencies, once everyone knows, that half doesn’t get spent.
The rise of performance advertising on the web counters this in an interesting way as dollars are managed to volume (sales/leads) and cost per. Here waste is weeded out rather quickly. The most interesting thing going on here in regards to waste is how Google brilliantly manages it. This is really their “special sauce” and unless you are really in the depths of Search Advertising you wouldn’t ever stop to think about the effects of waste during on-boarding or the use of match types or quality scoring but it’s happening. The lesson here is that if you can make a system that can bundle in waste but still makes people happy & successful with a modicum of transparency, you’ve hit a grand slam.
Interestingly, display advertising, once hailed as the bastion for Internet brand dollars is also now being consumed by performance campaigns because of the falling prices (due to increased supply). The issues here are a bit different as transparency is hindered due to the many layers of networks and technologies that have evolved in the stack between the publisher and advertiser. That will change. Performance dollars follow the path of least resistance.
Are people scared of the real numbers? In display they should be.
Ad impressions on Search are FREE. In Display every impression costs you money. The amount of people that click ads from search on a per impression basis is 4600% higher than display. That’s a big number. When your industry is broken to the core, why would you want to shine a light on that?
Not to worry, this decade will begin the rise of new advertising channels and I believe, as you do, transparency will be a core value prop.
I just completed my opening statement.
:)
Me likey. Thx man.
I was just explaining a nasty feeling.
Brilliant Jonathan!
Amen! Advertising legacy was actually noted early in its formation as the famous Department store scion John Wanamaker with the famous line “Half the money I spend on advertising is wasted; the trouble is I don't know which half.” Now we live in a world where we gaining the intelligence to know “which half” — problem is for media and agencies, once everyone knows, that half doesn't get spent.
The rise of performance advertising on the web counters this in an interesting way as dollars are managed to volume (sales/leads) and cost per. Here waste is weeded out rather quickly. The most interesting thing going on here in regards to waste is how Google brilliantly manages it. This is really their “special sauce” and unless you are really in the depths of Search Advertising you wouldn't ever stop to think about the effects of waste during on-boarding or the use of match types or quality scoring but it's happening. The lesson here is that if you can make a system that can bundle in waste but still makes people happy & successful with a modicum of transparency, you've hit a grand slam.
Interestingly, display advertising, once hailed as the bastion for Internet brand dollars is also now being consumed by performance campaigns because of the falling prices (due to increased supply). The issues here are a bit different as transparency is hindered due to the many layers of networks and technologies that have evolved in the stack between the publisher and advertiser. That will change. Performance dollars follow the path of least resistance.
Are people scared of the real numbers? In display they should be.
Ad impressions on Search are FREE. In Display every impression costs you money. The amount of people that click ads from search on a per impression basis is 4600% higher than display. That's a big number. When your industry is broken to the core, why would you want to shine a light on that?
Not to worry, this decade will begin the rise of new advertising channels and I believe, as you do, transparency will be a core value prop.
I just completed my opening statement.
:)
Me likey. Thx man.
I was just explaining a nasty feeling.
Brilliant Jonathan!
Everyone who sells something is fighting for a share of mind. Advertisers realize that in order to create an intangible value, they cannot be transparent. They have to do the work of a magician and possibly hope that in the end there will be a placebo effect.
The placebo effect doesn’t work in the financial industry. In the end of the year, you either made money or not.
Everyone who sells something is fighting for a share of mind. Advertisers realize that in order to create an intangible value, they cannot be transparent. They have to do the work of a magician and possibly hope that in the end there will be a placebo effect.
The placebo effect doesn't work in the financial industry. In the end of the year, you either made money or not.
ETFs have done well with transparency, but I don’t see how transparency could replace alpha for an active money manager. You tell me though: you manage a hedge fund, right? Do you think being entirely transparent (e.g., disclosing all of your positions and trades in real time) would help your performance, or help you attract new assets under management? If so, why not give it a shot?
As for advertising, I blogged about this a while back, but it’s worth checking out an old classic from the 1920s, “Scientific Advertising”, by Claude Hopkins. There’s not much new under the sun: back then, mail order was the measurable stuff — the keyword bidding of the day. And everything else was confusing and unmeasurable.
i dont want to raise money by showing my trades. by transparency I mean
your intentions and your sould and gut instincts.
getting anyone to follow you just because of trades is not the transparency
i need to allocate money to someone.
My fault for reading the post literally, I guess. Still not entirely sure what you are getting at here — being up front about your management style? style consistency? — but perhaps the picture will resolve as you blog about it more.
ETFs have done well with transparency, but I don't see how transparency could replace alpha for an active money manager. You tell me though: you manage a hedge fund, right? Do you think being entirely transparent (e.g., disclosing all of your positions and trades in real time) would help your performance, or help you attract new assets under management? If so, why not give it a shot?
As for advertising, I blogged about this a while back, but it's worth checking out an old classic from the 1920s, “Scientific Advertising”, by Claude Hopkins. There's not much new under the sun: back then, mail order was the measurable stuff — the keyword bidding of the day. And everything else was confusing and unmeasurable.
i dont want to raise money by showing my trades. by transparency I mean
your intentions and your sould and gut instincts.
getting anyone to follow you just because of trades is not the transparency
i need to allocate money to someone.
My fault for reading the post literally, I guess. Still not entirely sure what you are getting at here — being up front about your management style? style consistency? — but perhaps the picture will resolve as you blog about it more.