The latest book I’ve been reading is called “The Quants: How a New Breed of Math Whizzes Conquered Wall Street and Nearly Destroyed It” – it chronicles the amazing run that the math-inclined number crunching wizards mastered Wall Street in the late 80’s and 90’s that became the pre-cursor to modern-day Wall Street’s high speed flash trading.
I wondered as I read this that if we’re on another horizon of “Quant Marketers” as the buying and monetization of internet traffic is becoming similar to the commodities, equities and derivatives of Wall Street. If entrepreneurs today are creating the products and services to monetize users, then the users (traffic) is the commodity that needs to be bucketed, profiled, packaged and bought and sold.
It seems conceivable that one day there will be an efficient market where we can order a tranche of 10,000 customers at $1.00 per user that will return me $1.25 per user (a return of 25% on ad spend) – this philosophy is already commonplace in CPA networks; but the mechanics and fleshy middleman processes make these transaction full of friction. You have to signup to a network which represents a pool of publishers, identify your targets within the networks parameters, maybe call someone to wire in money or charge it to your credit card, then initiate the campaign. You then have to group this channel into a cohort and study how effective these users are to your ROI. Multiple this process a dozen times across all various ad networks and channels – you’re suddenly caught in the process of buying media, manually optimizing, and moving knobs around in an iterative and somewhat slow fashion. In the stock market, I can simply fire up E*Trade or some other discount broker, buy 500 shares of IBM and follow my position as it rises (or falls) – it should be that easy and uniform for online ads too.
Having said all this, it’s hard to ignore that some of these things are already changing, the nature of bidding on “keywords” on Google (and other search engines) has dramatically reduced the friction of bucketing users around keywords. Same thing is happening with display-ads on RTB exchange ad networks where you can buy across demographically targeted users. Time will tell when one day online-marketing is dominated by number crunching math wizards, but it seems it’s becoming progressively so – and they will be the keepers of the internet and the 1% just like the Quant traders on Wall Street do too.