Thought Leaders in Big Data: Damon Ragusa, CEO of ThinkVine (Part 4)

Sramana Mitra: One of my observations which pertains primarily to electronic commerce is that the more we can attribute, the more we can tie the marketing and advertising and customer acquisition to actual purchases. As you know, one of the most effective ways of marketing e-commerce is through affiliate programs. It’s 100% performance-based. There are lots of sites and apps that have accumulated huge numbers of eyeballs that they’re not able to monetize today. If more and more of this gap that exists today between traffic, lead generation, and conversion into actual transactions could be bridged, that would really relieve a lot of the friction that exists today between advertising and commerce. Can you comment on that?

Damon Ragusa: You’re absolutely correct on that but there are a few challenges. Part of it is based on the realities of digital marketing. You hit on one point. You talked about affiliate marketing as a good example that can be 100% performance-based, but because it is 100% performance-based, there’s often a lack of transparency. That lack of transparency goes into lack of good information data exchange when they’re doing what they do. That’s not necessarily posited back to the brand because the brand is getting a result that they don’t know enough about. What are some of the behaviors and types of audiences around it? I think that transparency has kept it down.

We have lots of customers who have big-time challenges in managing affiliate partners because, typically, it’s a big-head-long-tail problem. You have a handful of affiliates that just do great work for them and have great relationships, but then they have 2,000 or 3,000 of that long tail that they have to manage. For them, it’s a lot of cost and a lot of time to manage those. We spend a lot of time with our technology helping them understand how to shift some of their investments around and focus on the right type of affiliates.

I think in a world where there’s so much more content and inventory than there is quality inventory, that’s inherently going to be a big problem. That’s one of the big challenges of digital and Internet-based advertising. For all the high-quality inventory that you can invest in, there is a million times as much bad inventory that you still end up having to buy. Albeit efficient from a cost standpoint, the effectiveness of digital advertising when we talk about things like affiliate display advertising or other specific types of targeting or re-targeting, there can be some quality issues.

On the other hand, good quality lead generation that qualifies a good customer through those types of affiliates is where more investment happens. The problem there then is how you scale that. Those are the couple of things that have been challenging. When companies find the right sweet spot between more general advertising to lead generation promotion, they do very well. I’ve seen astronomical returns on investment. The hard part is finding that sweet spot because there’s still so much bad inventory that dilutes all the good that you can get. That’s the trick. As we push a little harder on more transparency in that model, we’ll see even better results.

This segment is part 4 in the series : Thought Leaders in Big Data: Damon Ragusa, CEO of ThinkVine
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