The biggest battle coming in the world of marketing is a 180-degree shift in the routing of commerce-related messages. Today, we call them “advertisements,” one-directional messages FROM somebody with something to sell TO somebody who may potentially be a buyer. Tomorrow, the messages will come FROM those wishing to buy TO those with something to sell.
This is the vision of Project VRM (Vendor Relationship Management, as opposed to CRM — Customer Relationship Management), Doc Searls’ ingenious concept of using the Web to turn advertising on its head by putting transactional power in the hands of the buyers. If you’re not up-to-speed on VRM, now’s the time to get started.
Some companies and investors are beginning to explore the creation of sophisticated systems to enable this, but Project VRM is a long way from fruition. It’s something we need to talk about now, however, because the vision logically and naturally “fits” the functioning connectivity known as “the network.” Here’s just one, admittedly overly simplified, VRM approach: The Fourth Party.
Commerce is a transaction between two parties, the buyer and the seller. In the 20th Century world, the duty of initiating a transaction was generally regarded to lie with the seller, and so a third party entered into the equation, one who delivers a message from the seller to the buyer. This is advertising in every one of its flavors. This third party — known as the advertising industry — exists as a complex and sophisticated infrastructure that puts food on many, many tables — it is identified as “Madison Avenue” and glorified in the TV series “Mad Men.”
I keep reading where people are looking for “the new infrastructure” for advertising’s reinvention, one that will “work” in the network. There won’t be a new advertising infrastructure, because it’s against the nature of networks. Geeks are familiar with Gilmore’s Law, but I’d wager you’d be hard-pressed to find anybody on Madison Avenue who’s ever even heard of it. Coined by John Gilmore, one of the very early web innovators — an alpha geek, if you will — it reads like this:
The net interprets censorship as damage and routes around it.
According to Adam Thierer, there are variations of Gilmore’s Law:
- “The net regards hierarchy as a failure, and routes around it.” — Mark Pesce, Writer, consultant, Sydney, Australia
- “The web regards centralization as a failure, and routes around it” by moving to the edge.” — Stowe Boyd, /Message blog
Damage. Failure. Whatever. The point is that the nature of the net — that every node is connected up, down and sideways — makes hierarchical, siloed, one-to-many connections seem woefully archaic and inefficient. VRM, however, takes advantage of this omni-connected universe by introducing a fourth party into the commerce chain, one that represents the best interests of the buyers, not the sellers. This fourth party will be the new infrastructure, but it will not be manipulable by deep pockets. In order to make money, this fourth party will have to put customer service first, working backwards by turning the hierarchical pyramid upside down.
Here’s an illustration created a couple of years ago for Doc Searls by Hugh MacLeod:
As noted, VRM is not ready for prime time yet. Zaarly, a highly publicized and well-financed version of the fourth party concept, has more or less given up on the concept and gone in a different direction. Other companies have similarly taken the “intent to purchase” idea and likewise failed. VRM is a much bigger concept than any single company can fulfill, especially at this time. It is, however, coming. The most promising current work is in the area of personal clouds, from which concepts like the fourth party can run. Companies like Kynetx and Respect Network are currently working to create the code necessary to enable VRM. The next few years will see some extraordinary technical accomplishments on behalf of consumers.
A good place to start your journey into the world of VRM is with Doc Searls’ fascinating book, The Intention Economy.
This is the kind of thinking that a.) fits the structure of the Web, b.) enables an entirely new branch of commerce, and c.) already has a growing number of infrastructure and other companies working on solving its various problems. There are tons of questions, of course, and many difficult arguments about the viability of a total tipping of the advertising world from supply to demand (not entirely likely). It’s the kind of thing, however, that seems more possible with every passing intersection on the road to the future of a connected and empowered consumer world.
Terry Heaton is President of Reinvent21, a consulting company specializing in business reinvention for the 21st Century. He’s an internationally-recognized creative expert on all things web-related, especially as they relate to local media.