Wednesday, February 6, 2013

The Reversal of Walmart-ization

Its now a given that technology is a disruptor in many facets.  Nowhere is this more true than with 'Mobile.'  The word Mobile fused with technology, conceptually speaking, is a force to recon with.  It has disrupted and is in the process of disrupting many industry players, some of them being incumbents.  The modern-day tablet computer is wiping out the PC industry.  Dell and HP, being prime examples of the remnants of the declining Wintel era, thanks to an onslaught of disruptive innovation brought on by mobile technology.

Lets take mobile technology and tack on another popular trend in the online advertising world. Real-Time Bidding, or RTB for short, provides an automated platform to match supply-side inventory with demand-side advertisers.  I sense the disruption in this relatively new concept is the 'real-time.'  Real-time means advertisers will be able to buy ad inventory and flash it on a mobile screen at the right time and at the right location.  Let me run you through a scenario.  Lets say you're walking in Times Square.  A supply-side entity, lets say facebook, knows you are at Times Square because you have location services switched on.  Facebook uses a RTB platform and connects with a demand-side advertiser.  The advertiser with a store-front in Times Square notices that a 'consumer' (you) are at Times Square and flashes an ad on your mobile screen.  For RTB to work, you would have to be looking at your screen while using an app that supports the RTB platform. I've simplified the whole process of the Display Ad ecosystem.  Behind the scene it is complicated and messy.  Dare to dive into it? Take a look at the LUMAscape of the Display Ad ecosystem.  So thats what RTB can do.  Advertisers get real-time information about you through your smartphone and immediately send you ads via apps that support the platform. The key to Mobile RTB is location.

Anyways, you might be wondering why any of this has to do with Walmart?  To answer that, I am going to ask you a question.  Which advertisers are going to use RTB on Mobile?  Is it Walmart or the single-brand and Mom n Pop stores that you walk past on a street?  Walmarts are glorified warehouses typically located outside of cities.  You typically need a car to get to a Walmart.

Do you see any stores other than a Walmart?  Do you see any mode of transportation other than a car?

The experience of shopping at a Walmart is less dynamic than walking down Rodeo Drive or 5th Avenue.  On city shopping streets, you will pass by hundreds of single-brand or Mom n Pop stores. These stores will want to use RTB ads to lure you into their store which is walking distance from you because they know you are there at that very moment (i.e. real-time).  Yeah sure, Walmart could use RTB as well but mainly to show you promotional items once you're already in a Walmart store.  The RTB ad won't do any good to Walmart if you're walking down a busy street.   They can simply show you a regular display ad on your screen - why bother with RTB platform.  You see, the contextual relevance is key to delivering ads via RTB.

IMHO, ads delivered on the RTB platform will be more effective than regular 'dumb' ads because of their precise targeted and contextual nature.  Users of RTB will see their business increase as they lure you away from Walmart.

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