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If You’re a Linchpin, You Have Nothing to Fear from Trada

Posted July 21st, 2010 by Andrew Goodman

Trada, the paid search management environment that enables crowdsourcing in a bid to help advertisers create more effective campaigns, won’t create your marketing plan with you. It won’t jump on a phone call with you to discuss the relative merits of different strategies. It won’t live and die with your results, explain why a certain tactic is working, talk you out of a risky strategy, or suggest bold expansion ideas that might seem expensive on the surface. It won’t act as your trusted adviser. It won’t give you a menu of risks and opportunities for advertising on trademark terms, and it won’t ask about the precise degree of tradeoff between protecting your brand image in ad copy and going “all out” in an unbridled pursuit of direct response. It won’t care if you are made to look like an idiot. It won’t integrate your ads and landing pages with other media efforts, or care to listen patiently while you describe that. It won’t take on certain additional tasks and responsibilities, and it won’t provide feedback on user behavior statistics in your analytics account.

But despite the fact that a crowdsourcing platform can’t provide coherent leadership for your digital marketing activities, it’s quite possible that it might be quite helpful in driving incremental results for some advertisers who don’t want (or who cannot afford) the cost and risk associated with hiring trusted personnel, or outsourcing to a good quality agency.

Trada is big news today primarily because their latest round of funding includes significant participation from Google Ventures, Google’s venture arm. You probably wouldn’t be reading about them today if that hadn’t happened.

Trada founder and CEO Niel Robertson does an insightful job of laying out the pain point in the market: “large” small advertisers with budgets above $5,000 per month (up to, they say, $50,000/mo), who can’t be satisfied with the cookie-cutter services provided by the fast-scaling “local search” and “click to call” focused search marketing shops, but who also cannot afford full customized service from top search marketing focused agencies and their associated experts and automation platforms.

For the US market, Robertson’s characterization is more or less accurate; it can be costly and risky to hire a top agency or to hire someone in-house to work on a smallish SEM account. But it’s important to note that Trada fully admits if your account is large and mission-critical (above $50,000/mo.), you shouldn’t be playing around with an experimental platform like Trada. (And who, I would ask, would be supervising this effort? Won’t a layer be needed anyway? How much will companies truly save here?)

It’s probably worth adding that $50,000 is probably really code for $25,000. And in small markets (like Canada, or Scandinavia), you might be able to find a cost-effective, professional solution (campaign manager plus appropriate automation) that makes sense even for a “smallish” campaign spending $25,000 per month. These needles in a haystack might be hard to find, but surely a good one would be preferable to attempting to “work with” a semi-anonymous rabble of wannabes.

How, in a nutshell, does Trada work? Advertisers offer a certain markup to would-be workers on their accounts, vetted semi-to-full professional paid search experts who have joined on the system. The so-called Optimizers in the system strive to beat the CPC or CPA targets offered by the advertisers. If they do, they get paid the appropriate spread for each click or lead generated.

Based on the demo I viewed yesterday, the idea is far more powerful than it seems at first blush. Trada has built sophisticated communication functionality into the system. Advertisers have the benefit of communicating marketing objectives — or anything else — they would like to the stable of Optimizers who have chosen to work on their account. Optimizers get to look at a battery of statistics that make the exercise competitive.

In addition, the basic credentials of the Optimizers are verifiable. They have to use their real names, leave a paper trail including filing tax forms, and must pass a certification exam.

The “too many cooks” objection, surprisingly, is not as worrisome at first glance as it might seem. Account coordination would seem to be a must to work on something as complex as AdWords (or the other paid search platforms). Not so, Trada seems to suggest. Through a quirk in how AdWords works and how Trada is architected, you define Optimizer ownership by ad group. Once an ad group is yours, even if there is keyword overlap with keywords “owned” by other Optimizers, that doesn’t inherently break the system. May the best interaction between keywords and ad copy win.

Still, that’s a significant departure from what we might have viewed as best practices in the past. In fact, given the potentially unwieldy and theoretically unlimited number of overlapping experiments that could grow inside accounts, it’s the kind of account usage that Google no doubt wants to monitor closely. By making an investment in Trada, Google Ventures can keep a particularly close eye on the company and the behaviors of its Optimizers.

In the end, Trada will live or die on the premise upon which it is based: incentives. The broad proposition, obviously, is that advertisers are incentivized to offer a certain bounty for anyone, regardless of method, hitting certain performance targets in their accounts. Optimizers have an incentive to hit those targets for campaigns they think they can help out on; a greater incentive where there is “low hanging fruit” and a decent markup offered by the advertiser, and little to no incentive where those conditions do not exist.

On the plus side, Trada has the makings of an open marketplace for this type of specialized effort, and it gives Optimizers considerable flexibility in pursuing opportunities where they can find them.

There are several significant drawbacks to the model, however.

First, it remains to be seen if the market will become liquid enough to generate enough overall account activity to “get things done” in the way that a self-motivating, whole human professional or adviser would. If advertisers are stingy with markups either in the early going or as time passes, participation by expert Optimizers will languish.

More importantly is the defection problem: primarily, the incentive advertisers have to offer only short-term benefit to their army of enthusiasts. Whereas relationships between companies and employees or trusted advisers in agencies might be based on some minimum standard of meeting halfway and recognizing that life is a two-way street, you don’t have any moral or legal obligation to a “crowd”. The so-called “crowd” shows you a reasonable way to get your leads for $15? Kick them to the curb, and keep the markup for yourself. After all, they can’t withdraw their leadership or care from the relationship: there was no relationship to begin with.

Trada has significant merit as an economic experiment. It is “hyper-rational,” one might say, so if the proper incentives are offered, the crowd might just be willing to show you how to build a better mousetrap (or 1,000 of them). But what is the proper incentive for an Optimizer? The opportunity to continue making a certain markup for (what?) a month, six weeks, before the program is shut down or before your “markup juice” slips away to the Optimizer who overlaps on your keywords, doing just slightly better? Before markups are squeezed at the behest of the advertiser?

Many serious business relationships in expert fields require coordination and a long term view. They are “extra-rational” — participants in non-formal (i.e. real) game-theoretical environments are much more likely to inject intangibles like trust and reciprocity into the equation. You don’t have to be a famous sociologist to recognize that social ties and trust can be a prerequisite to truly getting things done; and that includes the willingness to exchange deep expertise in any field. Will Trada’s Optimizers continue to see enough benefit to keep playing the game of building permanent assets for companies too cheap to hire a professional – or for that matter, working as low-paid help for agencies unwilling to scale up their paid search practices?



One Response to “If You’re a Linchpin, You Have Nothing to Fear from Trada”

  1. It sounds like they are looking for the same type of mentality that traders have – no shortage of people wanting to try their luck there. Same sort of incentive, trade well and you get to manage a bigger portfolio and demand a higher bonus. Same agency problems, also.


 


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