Everything Is Marketing is Everything
By: J. Macodiseas
Tags: Advertising, Marketplaces, Market, Startup, Marketing

If you wait long enough, everything seems to evolve into a crab. Biologists call this “carcinisation”. On the internet, sooner or later everything seems to evolve into a marketing platform. In this article, I will show you how that happens, what consequences it has, and what it might mean for you.

Let’s start with some examples.

Facebook is an obvious one — a platform started basically as a clone of Hot-Or-Not, a platform for rating the attractiveness of your school mates — evolving into an easy way to build a personal blog/website, struggling to find its business plan even as it had millions of users. It finally found it: it is now one of the top advertising platforms worldwide, topped only by Google.

Google is, of course, known for its search engine — so much so, that “to google” is now a verb synonymous with online search. But what is their main revenue? It is advertising, plain and simple. Most of it comes directly from the search engine (“Google AdWords”), 10% or so comes from google affiliates that post the ads on their websites, and similar. And an ever-increasing part comes from Google-owned YouTube.

YouTube is a platform to upload and watch videos. For many, it has now become the main entertainment/infotainment channel, replacing traditional TV. How does it make money? By advertising of course. Just like “traditional” TV channels did before it.

So much for the obvious examples. How about this one: it started as an online bookshop, deemed by many to be a crazy idea. Now it sells everything and the kitchen sink (literally) and is arguably putting brick-and-mortar stores out of business. But did you know that Amazon makes a full 10 billion a year from advertising, taking the third place behind Facebook and Google? That, of course, apart from the fact that it serves as a major online marketplace, a logistics provider, an IT infrastructure provider, and more.

It is no surprise that “Yahoo!”, known mainly for its search engine, makes its revenue through advertising — see google — but did you know that Apple — yes, the iPhone manufacturer — has an advertising network and is making 2 billion a year from that?

This phenomenon is not limited to websites: the predominantly Asian mobile chat platforms WeChat and LINE are not only messenger apps like WhatsApp, they are also advertising platforms. And literally everything else: ride and delivery services platforms (like Uber or Grab), online market places, and, of course e-wallets, aka payment services.

By the way of Grab, the South-Asian Uber competitor: of course you can order delivery on Grab now. And Groceries. And book hotels. And coupons. In short, something that started as a ride-share application is now also quickly evolving into a crab, err, a general-purpose advertising platform. Payable, of course, via a built-in e-wallet. (Yes, Libra is coming quite a bit too late into the game. I have my suspicions as to why.)

Why does it happen?

One word: exposure.

Every platform that is used by many people daily has those people’s attention. Take Amazon, and its dozens of competitors (eBay, Lazada, Shopee, …). People go there to buy things — and do so regularly. People search for things there. People rate things there. These are all obvious points to insert advertising and targeting algorithms. After all, Amazon knows everything about your online shopping habits. Who is paying for the ads? Why, Amazon users who sell their products there, because Amazon is also an online marketplace: most products on Amazon are sold by people like you and me, who have to compete with one another in an attempt to gain exposure. Unlike Amazon, that also actually sells its own products, its competitors Ebay, Lazada, Shopee et al, are nothing but online marketplaces.

A lot of those things are true for Facebook — people go there to talk to their relatives and friends, but stay to click on articles about tagged and analyzed topics. It includes a chat application that you use to stay in touch with your friends and relatives — which of course knows the general topics that you are chatting about. Even if it does not understand the exact content of your chats yet, it can easily scan your conversations for keywords, and knows if you need to buy kitty litter once again, and allows some affiliate marketer to hand you a sponsored link. Though by now, it also has groups dedicated to trading things, ie, it, too, has become an online marketplace. Like the aforementioned LINE and WeChat.

Something similar is true for Twitter — you might not reveal some of your more private topics on there — some people do — and probably not going to buy things directly on there, but you reveal enough about your interests that the information is useful for advertisers, who will happily take you off Twitter to some darker corner to present you with their selection of watches.

And while you will probably not reveal quite as much to a ride-share service, you are still looking at that app every single day if you commute to- or from work, so it can sell you stuff. Two more words: captive audience. In fact, the same is true for any well-run, well-visited portal, as long as it actually provides an additional value to the user that he can’t easily get elsewhere. The latter is important:

If a portal serves no purpose but to gather clicks and ad views, it might do so, but it is going to be a lot less successful than pretty much any actual service. If the news site you visit is just going to dump ads on you, you are not going to visit it for very long, especially if there is an equivalent site that doesn’t.

This, coincidentally, also happens if you do offer a useful service — as soon as someone else has better exposure than you do. For example, Uber is close to useless in Thailand, because both Grab and LINE are better known and thus it is far easier to get a ride with one of those.

Wait… LINE? Isn’t that a Chat app? What do they have to do with Uber?… Yes, LINE is the dominant chat application in Thailand — dominant to the point where almost everyone has it, and almost no-one has anything else. They have a merchandise store with enormous teddybears and rabbits in the middle of Bangkok. Thais use it obsessively. You can’t walk very far without someone’s phone screaming “LLLine!” at you. Which means, the app gets incredible amounts of exposure. Which it, in turn, used to slowly grow to include everything — including a market place, an e-wallet that is now officially accepted by the BTS Skytrain system in Bangkok, and — a ride sharing and delivery plug-in that is slowly displacing a number of competing services. Including Uber.

Similar things are happening in other markets as well: for example, you can follow the jostling between Booking.com and AirBnB. You might think that they really cater to different markets — hotels vs. private people — but there are hotels that offer some rooms on AirBnB, and private people offering their one room on both. Both sites have ads for more than just rooms for rent — Booking.com will offer you everything from flights over airport taxi to guided tours and travel insurance, whereas AirBnB will also sell you packaged “experiences” at your destination. Which sometimes are also guided tours. In the end, both are simply niche advertising websites with some extra features and a lot of exposure. What they really charge the host for, is the exposure, because everything else they offer is relatively easy to imitate, and therefore easy to compete with.

Which is why there are firms like Agoda that successfully compete with both.

And why Uber spent almost 4 Billion (!!!) on marketing before its IPO.

What do we learn from this?

Everything online that has exposure has the potential to become a marketing platform, but — unless it is truly a household name, or has a truly unique product that allows it to rely on word of mouth— it needs to put effort into maintaining exposure, and one of ways to do this, is marketing. It seems, marketing is an ouroboros, a snake consuming itself.

Ouroboros (image: Alchemy UK)

What does it mean for a Startup?

Here is where things get unpleasantly fuzzy. Remember that 90% of all new online businesses fail within the first 120 days, and one of the largest reasons for this is lack of exposure — be it lack of marketing, or hundreds of competing products that all vie for people’s eyes. If you don’t make yourself visible, it doesn’t matter how superior your technology, or how good your product is, nobody will find you: there are literally millions of websites and millions of apps to chose from.

But it is good to remember that marketing and exposure are not the same thing, and sometimes don’t translate well into one another — for example, the above-mentioned Uber discovered to their chagrin that 80% of their marketing spending was apparently for nothing. On the flip side, some companies excel at creating exposure without any marketing whatsoever. One of the masters of this is Elon Musk, who maintains presence in the media by creating large amounts of controversy, just like some media stars used to do before him. But you don’t need a million Twitter followers to be able to do this. For example, a little-known German company called Teekampagne — that is the world’s largest importer and one of the largest distributors of Darjeeling tea — was started by a German university professor, who created their original exposure simply by announcing their business plan in a newspaper. The business plan was completely outrageous for its time, and was picked up and torn apart by the press: Imagine that — a mail-order tea store, one that even sells one single brand of tea! — which of course announced the Teekampagne, and their entire one-item catalogue, to the whole of Germany, 80 million people — entirely for free. In contrast, check and see how much you would pay for 80 million views of your online ad.

At the same time, if your company manages to grab eyes, you might limit yourself to selling online ads from different platforms, like millions of entrepreneurs before you — or you might expand your own offering to provide people with what they might also need while they are here. You could rely on Google AdSense, or you might offer your customers the opportunity to advertise to your other customers. To sell something. You, too, could become an Ad-ridden app, a marketing platform — or an online marketplace for goods and services, like WeChat, LINE, or, yes, Grab.

Because in the end, on the internet, everything evolves into a Grab.