The Emerging Impotence of Mass Marketing

June 6, 2011

vehicles for mass marketing aren't what they used to beThe television upfront season is well underway, and as in years past, the results are baffling. Despite proof that network program viewing continues to go down, the networks are asking for and getting big cost-per-thousand (CPM) price increases for ad placements promised "up front." Moreover, the hidden promise in all this is that advertisements placed adjacent to these programs have increasing value, despite the reality of the TiVo age that people skip TV ads (or do something else). This makes no sense, and while some deep advertiser pockets are objecting (especially to the CBS demand for 18-percent increases), it appears the increases will be greater than last year's. It is absolutely baffling.

In an interview with MediaPost's TV guy Wayne Friedman earlier this year, I asked him about it.

This has been a big argument for many years. But the tipping point never seems to come. Broadcast ratings are still higher than the average cable shows. When those numbers truly are the same, sentiment will change and dollars will dramatically shift.

TV still is the biggest bang for the buck, even though that bang may be more of a "pop." NBC just won the bidding for the four Olympics but at a pricetag north of $4 billion. Sports events are the only truly remaining "must-see" events that gather large audiences, and their value keeps going up, up, up. When does the formula not make sense anymore?

This squeeze is a part of something much bigger that's taking place in the world of media: the fundamental business model for all of mass media is being undercut by disruptive innovations in advertising. Even after Friedman's "tipping point" is reached and cable's clout automatically shoots upward, mass marketing faces powerful forces that it cannot contain. Oh, it's not going away completely, but it will never again be what it once was. This is a colossal trap for media companies, and we are walking directly into it.

These changes go to the very core of any business that sells goods and services to consumers — to the heart of advertising itself.

The ability to influence people by inserting a message in front of large groups is slowly passing away as the go-to mechanism of business, 21st Century style. To repeat, it will always be around, but the paradigm has been disrupted so much that it is impossible to sustain forever a news and information world that flourished with the helpful deep pockets of Madison Avenue. The upfront season is biggest display of denial since the Emperor's New Clothes.

When I first began writing about new media, it was from an internet/tech media perspective. I'd just ended a three-year stint as president and CEO of an Internet start-up, and I found that my old business, television, was drifting along a dangerous path. So I wrote what I had observed, and one thing I often noted was that the vast majority of people writing about how the Web was disrupting media came from the media being disrupted. I found this writing to be woefully misinformed and self-serving (exceptions noted).

If your industry is being disrupted, the initial tendency is to view the disruption as something that can be co-opted to serve the interests of your industry, and that has always been the blind spot of media companies in looking at the Web.

When I began consulting with media companies about all of this, the first question in every board room or conference room was "Okay, Terry, we hear what you're saying, but where's the money?" What they meant was, "Where's the replacement money?" This has always been the cart before the horse, but the question was so common that I began to switch the focus of my attention from the content of new media to advertising, where I've made exactly the same observation that I made about media many years earlier — that the vast majority of the writing about advertising these days comes from people within the advertising and marketing industries. As I did with media people writing about media disruptions, I find this to be misinformed and self-serving, for Madison Avenue — like institutional media — wants and needs to co-opt the Web to sustain its place in the culture.

I'm sorry, but that's just not going to happen, for the disruption to advertising is even more significant than the disruption to media. The symbiotic relationship between media and advertising is such that the symbiote, the media, feeds off the host, advertising, so advertising's disruption is of greater importance to media than any content that media may create.

Every question about the funding of future journalism, for example, taps this core issue, for advertising doesn't "need" the symbiote anymore. Is Groupon worth the $25 billion valuation its IPO suggests? Some say not, but others see much farther downstream and think it's a bargain at that price. Just as media has been disintermediated, so, too, has advertising, and that puts the whole concept of one-to-many marketing in a different place than it was.

"Sooner or later, someone will have to buy an ad," a commenter wrote in addressing a piece by Jeff Jarvis on how "the article" doesn't necessarily represent news anymore. The assumption of the commenter is common but naive, because it expresses the belief that advertising adjacent to content is a permanent fixture for media. It's simply not.

Marketers complain that the problem with the Web is too much ad inventory. Inventory is what's valuable in a mass media model, but it's not online, because not all inventory is created equal. It's a big part of the reason why branding doesn't work (for the most part) online. It's a different animal entirely. In trying to work with local media companies on building local ad networks, I've actually been asked, "Terry, we can't even sell our own inventory; why would we want to sell somebody else's?" This seems a logical question but the answer is that not all inventory is created equal. It's about moving the rock for clients. We want it all to be equal, because we understand the business of selling inventory. What we don't get is the Web.

Madison AvenueMadison Avenue has had it made for over 150 years. It was birthed at the dawn of the industrial age and blossomed in the Mad Men era, because mass media was created and flourished during its lifetime.

Advertising is the lifeblood of commerce, and this has been around from the beginning. A sign on the door of the village baker pointed residents to the bread, and so forth. Newspaper classifieds spawned the Madison Avenue approach, which included smart and clever people figuring out how to manipulate a paper's big circulation for profit. That made it possible for two bakers to hang their shingles in the same community and compete for hungry mouths. The one who advertised best/most won the customers, and that was often determined by who spent the most money, including who hired the best Madison Avenue agency. The issue of who made the best bread took a back seat to who did the better job of selling it.

That's all changing today, and we need to take a really hard look at it, because media companies have been the primary beneficiaries of Madison Avenue's clout. At some point, it's going to come crashing down, because the numbers that have given us that clout are disappearing. Fragmentation is taking us back to the village, because we've discovered a great secret with this thing called the Web or "the network." Somebody forgot to ask "consumers" if they wanted to play in this sandbox in the first place, and the answer is coming back a resounding "no!"

The Web disrupts hierarchical cause and effect, and no profession needs that like marketing. Its essential purpose is to cause something to happen, whether that's through clever public relations management or spending enough money on advertising. The first tool in a marketer's toolbox is the ability to generate a desired effect. The Web disrupts this many ways. One, any claim made can be immediately checked. Two, the people receiving the message are connected with each other and can explore any claim that way. Three, people can launch convincing counterclaims, just as competitors can. Four, people can talk back to the claim and let others see it at the same time. Five, people can hide from or otherwise ignore the claim. I'm sure there are others, but the point is that traditional branding and other marketing concepts don't work online. The Web is a direct marketing marvel, but the profession hasn't figured out how to do that in an age when its targets — the elusive consumers — aren't cooperating.

Christopher S. RollysonOne of the responses of marketers has been to seed conversations in an attempt to gently coerce everyday people into doing the job for them. It's called "word of mouth marketing (WOMM). In a brilliant observation about why it doesn't work, Christopher Rollyson, an independent consultant and strategist, writes that the concept is oxymoronic. There's no such thing as WOMM, because marketing is deliberate and word-of-mouth isn't. I like the way he defines it:

Loosely speaking, WOM (sans "marketing") happens when a trusted and relatively unbiased "friend" shares her experience with a product/service with someone close to her. "Someone like me" who isn't tainted by sales commissions or quarterly revenue targets. Marketing, on the other hand, is generally about creating need or driving sales. Do you see the problem?

In this context, WOM and marketing are mutually exclusive: The latterís purpose is to serve the company by moving product; the former serves the person first. Itís a conflict of interest, and it will rarely work. Ever.

So marketing, the fruit of Madison Avenue, is about "creating need or driving sales," and again, nobody asked those being driven if they wanted to go on that particular ride. Marketing makes a lot of assumptions, and this is the big one. It's why I don't put much faith in current studies about what kinds of ads "work" online. Who cares? Technology helps everyday people escape the bombardment, and Jay Rosen's "Great Horizontal" is a fact of life that traditional marketing simply cannot overcome.

All this leaves us with a significant problem: how will commerce be enabled in the information age and, more importantly, will media have a role in the process? I think the answers to both are still being written, but here are five things I'd recommend to begin making room for a new kind of advertising hegemony.

  • As an industry, we must begin accepting that we don't know what we're doing and put out a clear call for help. This is heresy, of course, for if there's one thing media companies believe, it's that we can find our own way out of the hole we've dug for ourselves. Goodness knows we've got enough internal "experts" to help us out. All of our decisions, however, are made by us based on what history has proven to be our "best practices." If the Web is about direct marketing, then let's bring in direct marketing people who understand targeting individuals instead of masses.

  • We must understand that mass marketing isn't going away. It isn't one or another; it's one AND another, and that's a problem, for we still need to be selling reach and frequency through legacy properties. We can't do that online, however, and make any serious money, so the best we can do is create separate sales forces. I know this is not what we want to hear. Offline account execs should be able to sell online, but that's only true if we're looking at the Internet as mass media and selling CPMs. There is compelling evidence that companies with separate staffs for legacy and interactive end up with much bigger revenue on the disruption side, so why don't we all function that way?

  • Let's do something completely different and ask people what they think? In the age of empowered consumers, how do we approach them? We've got to stop thinking we've got carte blanche to deliver whatever "works" for advertisers. That went out with the pop-up era. Doc Searls and his group at Harvard are working on VRM, Vendor Relationship Management. He sees a day when consumers send signals to retailers instead of the other way around. How are they going to extend such signals? Maybe that's something we'd be smart to pursue.

  • In addition to exploring new forms of content, we must also be unafraid to disconnect the creation of content with the making of money. If we as media companies feel a journalistic sense of duty towards the communities we serve, then let's look at creative options for supporting that charge, and they don't all have to be directly associated with our content. Remember, we're not really in the content business; we're in the advertising business. That realization should free us to pursue other revenue alternatives instead of trying to be, for example, the best TV station online. That's ultimately a big dead-end.

  • All businesses that work directly with consumers must shift emphasis from marketing to the products and services they make and sell. Nothing meets the approval of potential customers like a commitment to quality and service, and this is multiplied manifestly in the age of empowered consumers. Empty, misleading or exaggerated promises are suicide when people can spread their disappointment among each other and elsewhere. There's no greater mission today than to respect the people we serve, and the best way to do that is to spend resources on better products rather than on how we sell them. Attraction is the key to seducing empowered consumers.

We must remember that the Web disrupts hierarchical cause and effect, and it's smart to move with that disruption instead of against it. This is why Twitter, Facebook and a host of other technologies serve the best interests of media companies so well. The trick is to understand and accept that social media is far more than just a mechanism for broadcasting a link or some other message. I always tell reporters, for example, that who you follow is much more important than who follows you. This accepts the participatory nature of the new culture, and we're going to have to do the same thing in the world of advertising. We'll never do that as long as we play only the mass media game.

Where's the money? In the West, those with goods and services to sell will always need to get the word out. As we're learning with Groupon, Google, Apple and a host of others, technology will always go where the people go and think as the people are thinking. Stay tuned, because the road ahead is going to be a bumpy one. Our job right now is to simply stay fixed on the horizon.