Media's Real Doomsday Scenario
September 20, 2010
A long time ago, Doc Searls taught me an important truth about advertising: "There is no demand for unwanted messages." He's right, of course, and this means the advertising "industry" is based on the thinnest of thin airs.
This "unwantedness" was evidenced recently by the results of a comScore study published in Television Broadcast. Here's the way it was presented:
People who watch TV shows online will tolerate about twice the amount of ads the medium now averages.
Wow, good news for online TV, right? But wait, did you see the unwanted messages reference? The value of the practice of television advertising is based on what viewers will tolerate. It's all nice and scientific.
"Across ages 18-49, seven minutes per hour represents the upper limit of advertising load for which viewers will remain engaged, with just over 6.5 minutes being the middle ground for achieving maximum engagement," says comScore's Tania Yuki. "Importantly, this 6.5 minute threshold represents an ad load that is more than 50 percent greater than what is currently being served to online audiences."
Just as it did over-the-air, those purveyors of television advertising will push the limits of toleration in their quest for profit. There's nothing wrong with that, but let's understand that in so doing, we're pushing people who can now push back.
The unwanted messages theme is the same with mass media in print. A paper with nothing but ads is called a sale paper or advertising supplement. There's only so far you can stretch the display advertising model before people begin to complain, too. Why? Because there's no demand for unwanted messages.
And toleration is a term that marketers take for granted. In order to tolerate something, those doing the tolerating must have the power to not tolerate it. Otherwise, it's coercion, and when given the choice to tolerate or not, the DVR disruption is proving that most people won't. So, again, advertising is what Harvard Economics guru Umair Haque calls an industry with "thin value."
We're seeing the endgame of a global economy built to create thin value: collapse. Why? Simple: thin value is a mirage — and like all mirages, it ultimately evaporates. In the 21st Century, we've got to reconceive value creation.
The advertising hegemony used by Madison Avenue is about to collapse, and when it goes, it will take traditional media with it. As alarming and preposterous as that might seem, it is exactly the impossibility of such a situation that makes it so likely and so dangerous. When it happens, those involved will look around in astonishment and insist that it couldn't have happened and that, indeed, either advertisers or media moguls have lost their minds. It is "too big to fail," as the economic theory asserts, and there will be cries that the government do something, but in the end it will be too late, for a whole institution of the modern world will have disappeared in virtually the blink of an eye.
The undeniable problem for "the system" is that there is no substitute, no concept to which the whole kit and kaboodle can be transferred, so that everybody lives happily ever after. It's simply gone.
It's gone because mass marketing needs mass media, and the dissolution of the mass media model continues unabated, so the value proposition of mass advertising is diminishing. It's gone, because advertising itself is in the throes of revolution, as John Wanamaker's famous quote about the uselessness of half of his advertising is blown apart by database targeting, social media referrals, and the ability to talk directly to the people formerly known as the mass audience. It's gone because the ROI never was what we thought it was. Kevin Clancy and Randy Stone nailed this issue in a June 2005 article in the Harvard Business Review on how technology is enabling precise measurement of advertising ROI.
Marketers aren't unhappy because they can't measure marketing performance. They're unhappy because they now can—and they don't like what they see.
Traditional advertising based on mass marketing cannot remain forever. Oh, I'm sure it will exist in some form downstream, but its logic has been entirely corrupted through technological disruptions, and the only thing holding it together today is the need for it to remain. As mass audiences shrink, those who put them together feel compelled to charge more, and Madison Avenue complies, because it must comply. These two forces, the industry seeking deals and the content publishers wanting more are on a collision course, and it simply won't last much longer.
"Advertisers have alternatives," NYU's Jay Rosen told me in an interview, "not alternative channels to advertise in, but alternatives to advertising itself." There are three things he believes are influencing the advertising disruption.
First, there's the lower cost production for all forms of media; there's much more inventory for advertising campaigns, so that pushes the price of advertising down. Secondly, with the Internet, the issue of addressability is improving so that we're making a major start on Wanamaker's 50%. So that makes it more efficient and because it's more efficient, it's bringing the price of advertising down. And the third thing is the sources can go direct, as Dave Winer says. I don't know why this part is so hard for people to understand — maybe because it's so simple, they overlook it.
Those three things together are not just changing, they're unraveling the advertising business.
"Going direct" is exactly what Cocoa Cola did earlier this year in a stunningly successful campaign involving the World Cup and Twitter. Tweeting the ad to the left, Coke measured 85 million impressions in just 24 hours with an astonishing click-through rate of 6%. That's five million people clicking on a Coke ad via Twitter. Mass media has no way to respond to such a useful tactic.
Another major element in the "mirage" that is advertising is the assumptions upon which the industry is built. The big one is the reference to businesses as "advertisers," for this is not really how businesses see themselves. That makes it difficult for media to see businesses as anything else. As Rosen points out, "Advertisers are not in business to advertise. That is not their mission in life."
If you have a backyard pool store that sells pool equipment and then in winter does holiday stuff, that is what you're interested in selling, not advertising.
So, if there's another way to reach the people that you want to sell widgets to, you're going to do that because your mission in life is not to advertise. They don't walk around saying "I'm an advertiser." They say, "I'm a supermarket," "I'm a pizza shop," or "I'm a garden store," never "I'm an advertiser."
This dehumanizes commerce by reducing everything to equations that include entities like publishers, audiences, advertisers and inventory. These form the core of mass media, and each is in disruption. Anybody can be a "publisher," even the people formerly known as the advertisers. No longer content to sit back and be exploited, "audiences" can now interact, talk back, and talk to each other. "Advertisers" are real people trying to do business in the best way they know how, and they're armed with methods of selling that simply have never existed before. And "inventory" is an industrial age term that no longer applies, especially not within the direct-marketing marvel that is the Web.
Madison Avenue is a house of cards based on the illusion of business-as-usual. Its fragility is hidden from those involved, because they can't and won't bring themselves to see it. This will be its sad undoing.
In the new world, advertising IS content. It's news, just as much as the shooting downtown. How that news gets to people wishing to buy is the new challenge. Doc Searls wants a way that he can "advertise" for what he's seeking and have people selling those things respond to him. That would be turning the whole concept of advertising upside down, but that's exactly what's happening in so many ways as we live through the Second Gutenberg Moment, that stunning end to the industrial, colonial, modern age brought about by the Internet.