Tech And Advertising Need Each Other, But They Don’t Want The Same Things

You know what’s odd? According to Digiday, “there’s a tendency in tech, especially in Silicon Valley, to view advertising remotely, even look down on it.” Yet, every day there’s a new tech startup sprouting up in a loft near you with the intention of getting rich from advertising.

“I frequently meet startups which believe that advertising dollars will make them rich,” said Rob Norman, of GroupM at Advertising Week recently. “Most don’t offer any real opportunity for improvement, at scale, for the owners of brands — just one, I’d say, out of 100 will make a significant impact in the advertising business.” Perhaps, because people from technology backgrounds speak a different language than does the ad pack.

“There is too much territorialism, which just slows everything down and often just leaves the consumer sidelined,” said Torrence Boone, Google’s GM for agency development and a former Digitas and WPP executive. “We need to be more real-time, scrappy, and comfortable with the messiness of innovation. The magic comes when we get everyone in a room, the egos get checked at the door and we roll up our sleeves to really try to solve a problem collectively.”

In other news, Forbes is running a cover story on Dropbox founder Drew Houston, 28, who came to California from MIT with “billionaires, bottles and babes” on his mind. Yes, geeks have base desires like everyone else.

Thankfully, solving real world problems was also on Houston’s mind, and his company’s ability to do so is making him a rich man with nary and ad in site. Dropbox perfected the freemium model, and with 50 million users and growing, the 4% who pay for additional could-based storage–Dropbox provides two Gigs of space for free–are generating $240 million a year in revenue.

Rather than advertise their new cloud storage solution, Dropbox turned their customers into salespeople, giving away 250 megabytes of free storage in exchange for a referral. One-quarter of all new customers still come to Dropbox this way. In fact, should you follow this link and sign up, I will get an extra .25 Gigs of space added to my free account.

Dropbox is currently valued at $4 billion by VCs with skin in the game. Houston’s 15% share is worth $600 million; hence, the cover of Forbes. And get this: even if Dropbox doesn’t sign up a single customer in 2012, their sales will double. The subscription model for the win.



About David Burn

I wrote my first ad for a political candidate when I was 17 years old. She won her race and I felt the seductive power of advertising for the first time. Today—after working for seven agencies in five states—I am head of brand strategy and creative at Bonehook in Portland, Oregon.