Data is the new “content”

data sales is the futureThe role of the ad agency in the Media 2.0 world is evolving, and like media companies themselves, ad agencies face an uncertain future. The problem for agencies is that they exist as middlemen between advertisers and media, and the uncomfortable reality is that the Web tends to route around those who used to make their fortunes by being in the middle.

There is considerable debate about all of this, and of course, agencies aren’t giving up without a fight. At the very core of that fight is the world of data, the Holy Grail of the Web, and whoever or whatever is able to manage data for the benefit of clients in a cost-effective way will likely have a seat at tomorrow’s media table. Even this, however, is uncertain, for one of the big unanswered questions of the day is who owns the data about visitors to a website, the publisher or the advertiser who’s running ads on that site? This is one of the issues in the publisher revolt started last year by ESPN in announcing they would no longer accept ads from 3rd-party ad networks. The networks think the data belongs to them. Publishers think otherwise.

A recent New York Times article (Put Ad on Web. Count Clicks. Revise.) featured the work of an ad agency built on the use of online data.

From the “Mad Men” era until now, advertising has been about a catchy tagline, an arresting image, the Big Idea. But Mr. Herman (Darren Herman, president of Varick Media Management) and his competitors are bringing some Wall Street-like analysis to Madison Avenue, exploiting the huge amounts of data produced by the Internet to adjust strategy almost instantly.

If your site is part of an “ad exchange,” your remnant ad spaces will be grouped together with others of similar demographic and psychographic nature and sold through one of these data-centric agencies. The idea is that the eyeballs that visit your site are more valuable when grouped with other similar eyeballs, and the exchange allows publishers to earn more per ad impression than they would otherwise.

Jarvis Coffin of Burst Media wrote in response to the Times article that this data-centric approach should eventually lead to offline as well. He took the Times to task for missing the real story, which is the use of data in behavioral ad networks.

Indeed, searching for the new heart of Madison Avenue has been the past-time of many people inside and out of the industry for years. Maybe love has finally found a way. Once again, information is power and much of it derives from the sort of relationships that ad agencies have continued to enjoy — albeit in serf fashion — with their clients. Sitting atop copious amounts of campaign data, which they have watched get turned into fortunes by vendors with shifting attachments to the strategic welfare of a client, ad agencies have decided they are – and ought to remain – media planning and buying vendors of first and last resort.

Good for them. Now they just have to figure out how to get paid for it, but the excitement and opportunities increase when they consider how data can begin to play a livelier role given the expansion of digital media technology to all places offline, especially TV.

One of the cornerstones of Media 2.0 is data, and local media companies are facing the dawn of the database age with no idea of its requirements, scope or the tools necessary to compete. This needs to change and change quickly, ‘lest all local media companies find themselves at the wrong end of the online value chain. The making of expensive content is not the best revenue position for tomorrow. That seat belongs to those who manage the data of the local market.

Gordon Borrell has seen this evolve in his own work. One of the characteristics of what he calls “Green Zone” performers — those media properties that do above average online revenue market share — is an incredible thirst for data. He told me in an email that most media companies are still stuck in the past.

I think analog media reached the zenith of their youthful beauty a few decades ago, and what we’ve seen since the mid-1980s is an obscene amount of cosmetic surgery and make-up. Newspapers moved from talking about “subscribers” to a much bigger metric called “readers,” figuring that if a newspaper hit the doorstep of a household had 2.5 adults in it, there must be 2.5 readers in it. TV started talking about TV households, figuring that if a household had a TV in it, people must be watching it. And radio invented cume — which is a fancy way of saying that if the radio is left on long enough, a lot of people might actually listen at some point.

The Internet isn’t as lucky. It has things like pageviews, clickthroughs, unique visitors, time spent online, “bounce” rates, and connection speeds. While some of those statistics can be misread or manipulated, there’s a helluva lot more to go on than a mere telephone survey or diary sent to less than one percent of the population.

Borrell added that data has become incredibly important and that he’s witnessing “a great divide” between those who know how to collect and read that data and those who don’t.

Helping advertisers understand just how many people saw their message, how many clicked on it, what times of days produced better responses, and what people did after they clicked — are all wildly powerful pieces of information. The collection, analysis and manipulation of data will continue to be more important in the media landscape, thanks to the application of computing power to advertising. I think information is still power, but the collection of vast amounts of data magnifies the potential.

Add to the equation the reality that some well-informed local advertisers are themselves becoming extremely well versed in data, and you can see the problem for media companies who just sit on their hands in the Media 2.0 world.

We feel strongly that the window is open for smart media companies to move in and seize this space at the local level, becoming, if you will, ad agencies themselves. That window won’t stay open forever, and the sooner we adapt to a data-driven marketplace, the sooner we’ll be able to grow significant revenues online.

(Originally posted in AR&D’s Media 2.0 Intel Newsletter)

Comments

  1. that’s a damn good newsletter. thanks!

    (love that “quote of the week” too!)

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