Strategy
Are You My Digital Product Studio?
And what exactly is that?
Like any liberal art prone to budget cuts, the advertising industry is autothanatophilic — erotically attracted to its own death. So there’s lots of juicy death-of-advertising stuff in the recently-published article/essay/broadside, “State of the Digital Nation,” by Jules Ehrhardt:
The rapid commoditisation of the services the industry offers will continue to erode profit margins. As mobile engineers slowly become as ubiquitous as web engineers the premium on skin deep mobile marketing work will disappear. Margins will go south the same way of once bountiful web marketing work. We have seen that pattern play out on platform after platform.
But there’s lots more to the essay than death-of-advertising stuff (and before you get worried—advertising always survives, like athlete’s foot, or the novel). For example, Ehrhardt’s description of the coming struggle between big-ticket consulting firms and giant ad agencies is true to our experience in the eight months since we launched Postlight:
All of this has the behemoths colliding. The old school T-Rex Ad Holding Firms are now fighting over prey with the genetically engineered I-Rex management consultancy design groups (sincere apologies if you haven’t seen Jurassic World)…make no mistake these are absolutely giant companies fighting it out and the battle will be epic!
There’s the “Digital” Ad Agency — with a name like Smother or The Cardboard Agency or A Bafflement Group. These organizations are really good at shipping the “melt your own face off” selfie app for Wendy’s ChewCrystals or whatever. Then there’s the digital labs inside giant consulting firms. It’s hard to figure out exactly what these labs are doing—if you ask them point blank they’re unable to tell you—but best I can tell the big consultants go out to giant companies and hunt out “metrics,” and deliver a nice 36-month strategy, and then their “labs” build dashboards to show you those metrics in real time, so that you, as an executive, can enact their strategy and succeed just enough to justify buying more consulting services.
These are real software products but they don’t represent where people spend the bulk of their time with computers (messaging, games, etc). So what kind of company builds those things? The answer is “a digital product studio,” and much of the rest of the article is dedicated to defining what one of those is. Which, you need a grain of salt here because Ehrhardt (1) co-owns a “digital product studio” that employs about 300 people; and (2) is arguing at significant length that the agency/consultancy of the future is the “digital product studio.” Caveat perusor, but, also, wait a second—they did Monument Valley. He writes:
The Digital Product Studio seeks out partnerships with clients rather than the antiquated shit-flows-downhill vendor client relationship. It steadfastly avoids abusive, non-reciprocal relationships. It will work with, but not through, third parties to work with clients as it will not endanger the quality of access, process, and communications necessary to build good products. Teams take on the same emotional commitment to the product’s success as the client — we’re all in it together.
I read that and thought, We do that too, at Postlight! But I mean, there’s nothing actually all that high-minded about it. It’s just insanely expensive to build and ship software—25% of the salaries in advertising are below $50,400 a year, which is emphatically not the case in product development—and so you have to be crabby about it, starting with the sales process. If our digital product shop did any of the things you do in advertising (20-person teams, endless pitches, “ideation,” cocaine) we’d be dead broke in five minutes. It’s just a different business. Smaller teams, more unknowns, different kinds of risk.
Where Erhardt lands is that the modern digital product shop looks like this:
We talked about this idea quite a bit over the weekend. Postlight is very much a digital product studio, by this definition. We don’t have a venture wing, and I don’t know if we ever will, but we’ve already shipped a few of our own products—GIF Battle, an experiment/game, and Mercury, an AMP transformer, plus an open-source framework. With more in the works. So our triangles look like this:
Community is turning out to be very important to us in a ton of ways. We do this newsletter, a podcast, and at least one event a month. We open our space to nerdy community groups, diversity-focused groups, and to other companies. We probably reach one or two thousand people per day. This is incalculably useful for recruiting and communicating over the long haul. It brings all the people that define this new business—venture capital, tech firms, community groups, interested bystanders, designers, engineers, and product managers — together under a roof, which happens to be our roof. I probably spend an hour a day introducing people. The returns are difficult to measure and frankly why bother? You’re either going to go all in on community or you’re not. But at the same time when 200 people show up for a product launch, that’s also a really good signal.
Anyway, it is a compelling essay written at an interesting moment in the world. Is the future all in Digital Product Studios? I don’t know! Our future is, so we found it interesting.
Paul Ford is a co-founder of Postlight.
