Essay: The Fading Levers of Commerce

Here is the latest in my ongoing series of essays, Local Media in a Postmodern World.

The Fading Levers of Commerce

Hello, friends. I’m writing a new book, so it’s hard to find time to continue my essay series, but the article referenced in this one so got my goat that I simply couldn’t stand it. Last week, Fortune published a missive critical of Apple for encouraging ad blocking on the Web by building new mechanisms into iOS9 that allow for easier ad blocking software by developers. Why is it critical? Because it’ll do exactly what its promising, and that is intolerable to the ad industry. Sheesh. Give me a friggin’ break! Look in the mirror, ad people. You’ve brought this on yourselves.

Local Advertising Hits A Tipping Point

“(W)e’ve reached the end of the Golden Age of Advertising,” says pioneering media researcher Gordon Borrell in a new report that paints a very realistic picture of the state of local advertising. This report — Local Advertising Hits A Tipping Point — is a 5-year follow-up to a report published in 2010 and tracks the opinions of 7,228 small and mid-size advertisers (SMBs).

While there is a lot of between-the-lines conclusions to be drawn, here are just a few of the report’s findings. Remember, these are advertisers speaking, or it would be more appropriate to call them “the people formerly known as the advertisers.”

  • 82% of SMBs have established their own media channel in the form of a website or social media page.
  • Since 2007, spending has skyrocketed to the point at which businesses last year spent 72% more on marketing services and promotions than they had spent 10 years earlier. Meanwhile, the annual expenditure on local advertising was 22% less than it was a decade ago.
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  • 72% of those are purchasing digital services to support those channels, spending far more on those efforts than on basic advertising.
  • By examining IRS tax records, Borrell concludes that “if businesses were devoting the same percentage of this year’s gross revenues to advertising as they were 10 years ago, the advertising economy would be $56 billion richer.”
  • Online media appeals to the largest percentage of local advertisers and takes the largest share of ad budgets of any other media. This is a pedestal newspapers have occupied for over 300 years! “Over the next 12 months, the gap will almost certainly widen to the point that all traditional advertising channels — print, broadcast, outdoor and mail — begin to look like niche support mechanisms to a local businesses’ digital marketing plan.”Screen Shot 2015-06-10 at 12.33.49 PM
  • Traditional media has devolved into an option, selected by habit or by preference but certainly not by necessity.
  • Online is so strong that by 2020, Borrell projects that all traditional media will scramble to maintain a small set of advertisers who will spend small shares of their budgets with them.
  • Local businesses, on average, get 20% of their sales from online, versus 13% by the old standby, the telephone.
  • These businesses have just begun to become digitally savvy, according to a new metric from Borrell. 85% of SMBs fell short of a line considered “very active” in digital activity. What this means is that they are novices that somebody can teach and that the more savvy they become, the more disruptive they’ll likely be.
  • 82% of respondents maintain a social media page with an average of 2,123 followers, though 61% have fewer than 1,000. The report notes that growing their own audience base equates to real customers for SMBs, which is radically different than buying ads based on somebody else’s reach.
  • Native advertising (a.k.a. Content Marketing) is another area of satisfaction for SMBs, although its use is low. This equates to a growth opportunity for those providing a service.
  • Mobile is another BIG area of interest, although not in any traditional advertising sense. The projected spending categories for mobile relate almost entirely to SMBs own web franchises and include things like Responsive Design (mobile-friendly), search, SMS, proximity, apps and video.

With all Borrell research, it’s useful to take a step back and try to get a 30,000 foot view. What this report doesn’t say directly is that the levers of commerce in our world are shifting to the hands of businesses themselves due to the growth and development of a networked culture. The beauty (or evil, depending on your perspective) of the network is that it is a 3-way communications medium, which allows human beings to by-pass filters that the network deems inefficient and, frankly, now useless. This includes our entire cultural infrastructure of expertise divided into silos, the first of which is how we communicate. There will be others.

This Borrell report tracks empirically the shifts relating to the way money changes hands in the levers that grease of the skids used by businesses to reach customers and sell their wares. Those businesses are loudly telling us now — along with their customers — exactly how THEY want things done, and clearly that doesn’t include traditional forms of getting the word out. It’s too expensive. It’s too haphazard. It’s out of control in ways that we tend to disregard in the name of profit.

While I certainly respect the crisis that journalism may face in all of this, we’ve been our own worst enemies in the assumption that we could simply shift our model to the Web. It’s too late to effect any significant change in that strategic blunder, but it’s not too late to shift our focus to what we’re being given and away from what we want. That, I’m afraid, is the only logical path for the days, weeks, months and years ahead.

Meanwhile, Gordon Borrell will continue to apply his fascinating research to helping us understanding not only what’s going on today but also where that’s all headed.

The lesson of Bill Simmons and ESPN

bs_report_300The always astute James Andrew Miller, writing for Vanity Fair, makes an important observation for all media in his “Inside the Shocking, Abrupt Divorce of Bill Simmons and ESPN.”

In the end, one could say with minimal originality, but considerable accuracy, that Bill Simmons simply flew too close to the sun. He miscalculated how much value ESPN put on him and on his unique abilities and talents. He might also have forgotten a cardinal company rule that remains sacred whether it’s ESPN’s Old Guard talking or its new one: Nobody, but nobody, can be bigger than those four initials.

On the other hand, it could be said that Bristol forgot a kind of cardinal rule itself: In an era where fans can get not just scores but highlights, and a ton more, on their smart phones, distinctive and original content is the way to engage and hold onto an audience plopped in front of big 99-inch screens. That content often comes with a big price tag—and with a requirement that the people with unique abilities and talent who create it be treated like the stars you’ve paid for.

In a world of mass media, the single brand of the company rides atop every other marketing concern. This is a core Madison Avenue concept and the truth behind Miller’s statement that “nobody can be bigger than those four initials (ESPN).” In the next paragraph, however, he describes the truth of Jay Rosen’s The Great Horizontal, which is the newer and greater reality of today and, especially, tomorrow.

So allow me to restate what I believe is obvious. Media is increasingly about personal brands, because those are what’s permitted in the revolutionary conversation taking place among the people formerly known as the audience (another Rosen witticism). Even where brands are able to “act” like people, they are not, and this is the harsh reality of doing commerce in the age of the consumer. Harvard’s brilliant Umair Haque noted long ago that companies should be spending money on products instead of marketing, and his justification was this very thing.

This is why I encourage students and people already in the media industries to expend the energy necessary to create and maintain their personal brands. In the end, it’s the only thing that really matters in a networked world, where exchanges of knowledge and information occur at the personal level. The age of slick marketing is drawing to a close. You won’t be able to buy your way into anything downstream, because the process for doing such is slowly disintegrating. In 15 years of trying, Madison Avenue has returned to an old stand-by — one that empowered consumers have already dismissed — the pop-up ad. It’s truly amazing that, just like The Odd Couple, this tired old irritant is back with a vengeance. How true is the old saw that if your only tool is a hammer, every problem looks like a nail.

Commerce in the Great Horizontal will require great products and services and people willing and able to pass them around. There’s already the idea that “influencers” at the personal level are what product manufacturers need to buy, but that’s merely wishful thinking from the hammer known as Madison Avenue. I don’t have a map with the route from here to there charted, but the laws of attraction will be more useful than the laws of promotion.

Local advertisers to increase online spending this year

In what is clearly yet another threat to the health of the traditional local media business, a new survey from Borrell Associates reveals that advertising’s shifting sands have made their way to the local level. In preliminary results (1,800 participants) from an ongoing survey of thousands of small and mid-sized businesses (SMBs) around the country, the largest number — 57% — say they plan to increase online spending this year. That number is significantly higher than any other form of media in terms of increasing ad spending. According to Gordon Borrell, “If overall local ad budgets are increasing only about 10% in 2015, the high growth in digital is coming at the expense of other media choices – notably print.” Yellow Pages, newspapers, and magazines are the hardest hit media categories, with each being targeted for spending decreases of over 20% or more.

Click to Embiggen

Click to Embiggen

The most interesting aspect of this new Borrell’s survey is that the majority of those who advertise in traditional media channels say they’re in a holding pattern on those expenditures this year.  That is, 51% to 65% of them said their print, broadcast or outdoor ad budgets would probably remain the same in 2015.  

(NOTE:  These results come from surveying active advertisers in more than 100 markets across the U.S.  If you’d like to know how YOUR local advertisers compare with these results, the Borrell survey will remain open until April 15th.  To participate in Borrell’s massive SMB survey, contact Greg Harmon at gharmon@borrellassociates.com.)

Another new essay: the collapsing mass market

Here’s the latest in my ongoing series of essays, Local Media in a Postmodern World.

The Slow but Certain Collapse of the Mass Market

Television is all agog over “programmatic,” a web advertising method where advertisers bid — the ideal being in real time — on inventory for their ads. This usually results in higher rates, and everybody wins. But programmatic on TV is really just another form of mass marketing, so I have little faith in its future unless and until TV becomes a one-to-one medium like the Web. Then, of course, it will no longer be “broadcasting.”

It’s Time To Revisit Our Mobile Strategy

Here is the latest in my series of essays, Local Media in a Postmodern World.

Time to Revisit Our Mobile Strategy

While local media companies focus their attention on the creation of apps, the way most people are accessing their content is through the open Web. We simply must pay attention to how we are being viewed and apply creative efforts to monetize that. Most TV stations use content management systems (CMS) that serve complex web pages to users who click on links they like on Facebook, Twitter, Tumblr or any other of the major mobile apps people use. This is a self-destructive strategy, for not only do our monetization efforts go unnoticed; it puts unnecessary hurdles in user paths before they can read or watch the links.