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I'm a partner in the advanced analytics group at Bain & Company, the global management consulting firm. My primary focus is on marketing analytics (bio). I've been writing here (views my own) about marketing, technology, e-business, and analytics since 2003 (blog name explained).

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May 04, 2009

AOL's Future: Our PhDs Can Beat Up Your PhDs

Tim Armstrong, the new CEO of Time Warner's AOL (soon-to-be-ex-) division, recently gave an interview  at the 4As conference to Ad Age's Jonah Bloom.  Before taking the AOL gig, Armstrong was the top sales guy at the world's most influential media company.  So I figured maybe I could learn something from him.  In the interview, and especially in part III, he said some things I found interesting, especially on both a sales-tactics level and on an analytics-strategic level.  Also interesting was the way, at least as I heard it, that they talked past each other.

In part III, Bloom asked (I paraphrase throughout, emphasis mine) for Armstrong's vision of what AOL would be: "A content company? Community? Technology services? An ad infrastructure player?"  Armstrong:  "an Internet digital products company... competing on making products simple and innovative."

Bloom probed first, perhaps tellingly, on content: "Do you believe that the Internet can support quality content?"  An interesting first thread to pursue,  given how Armstrong had answered.  By my lights, a very east-coast, old-school publishing way of looking at the world, magnified (meant as a compliment) wonderfully by Bloom's perfect-for-the-ad-world, vaguely Eton-meets-Ali G English accent -- we author (high production value) content, and you (unwashed masses) passively enjoy our oeuvre.

Armstrong answered, "Yes, in a way that's respectful of the quality of the content.  Brands are important, and I haven't met too many marketers that want to associate their brands with content that's beneath them."  

Bloom pressed, "Are you saying there's a way to get good content paid for, by the consumer, and not just with an ad-supported model?"

In answering, Armstrong played a clever sales card, cognitive dissonance.  He said, "People are not paying enough to put their ads on AOL content."  Brilliant!  Here we were all thinking, "AOL, fourth-place portal my grandma uses, sux," etc. and he plays the "I've got nothing to lose, so I play unpredictable" card.  Now he's got us thinking.  We ask ourselves, "In this hypercompetitive world with increasingly perfect  pricing, did I miss something?  And, he's Tim Armstrong, so I should hear him out.  Where's he going with this?"

"Publishers don't give ad agencies enough insights," he said.  "Agencies pound but don't get what they are looking for, to move brands to a different degree.  AOL has a research lab with 40 PhD engineers in Mountain View -- I didn't even know we had it before I started -- and the insights they have on how advertising works... we have problems getting that information around inside, but if agencies had that information available to them, in a more transparent way, there would be a lot more ability to innovate and test and integrate the systems..."

He continued, "If I were an agency, I would say, 'What's the access I have to insights?'  [As a publisher] I would have a Chief Insight Officer who basically the only thing they did would be sharing with those [agencies]."

I was dying to hear an example or two of these magic insights that promised to be AOL's path to pricing glory.  Interestingly, Jonah didn't pursue this, and the first question from the audience was about selling out the AOL logo for co-branding.  Oh well.

My take: really interesting to hear Armstrong implicitly attribute the value of content not to its production inputs but to its performance, and to focus on the insight-generation capability as the core engine of AOL's way back.  As for his prescription for agencies (extensible to any publisher really), I don't think appointing a Chief Insight Officer is likely to be enough.  In our practice, as I wrote a while back, there's "scaffolding" you also need to generate and leverage insights:

...while the "data deluge" of the digital world demands that you improve your infrastructure for taking advantage of it, I've come to believe that we need to think about building a "data warehouse" as a continuous process and not a single or episodic deliverable.   To this end, what's important is having

    • map that shows where all the data lives,
    • dictionary that explains what piece of data means,
    • directory that explains how to get to the data,
    • guide that describes how routine analytics get done and associated decisions get made, and
    • library (searchable at minimum, if not indexed) that stores all of the individual bits of research (again: queries, regressions, tests, benchmarks) and conclusions you've reached in the past. 

These artifacts need to be living documents, like Wikipedia, rather than static editions.  But like Wikipedia, they need to be "curated". Or if you prefer a different metaphor, think of them as parts of an "insight engine" for driving your business, which collectively need to be lubricated and maintained to run your business at peak performance.  Based on recent assignments, I'm convinced there's a 20-30% time-to-market advantage associated with having these things up to snuff.

Related: Larry Kramer argues that AOL-Time Warner was a good idea that failed in execution.

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