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Wednesday, July 14, 2010
It's Called "On-Demand" for a Reason!
By Mike Einstein
The ad business offers a curious take on supply and demand
in that the same supply must somehow satisfy two demands.
The supply is represented by the overall ad inventory;
billions of ads in myriad forms across a vast array of
media, all competing for the same eyeballs. The demand,
however, assumes two disparate forms: There's the internal
industry demand, in which an advertiser seeks exposure via
a specific media supplier, and then there's the external
consumer demand for the information conveyed in those ads.
Problem is, in an on-demand world, there is no consumer
demand for advertising, leaving us with an industry that
preys on itself through insider trading in a commodity
in which no consumer has any interest at all.
Totally lost in this incestuous relationship is the ability
to engender affordable big-brand reach and audience scale.
Yes, it's possible to scale the supply, but so what? That
only keeps the intermediary busy chasing their own long
tails. What our industry needs?and what every big brand on
the planet seeks?is a way to scale consumer demand. And we
can't reach consumers with a product (ads) that no one
wants and everyone is equipped?and inclined?to avoid.
Industry reaction to this conundrum has been predictably
myopic. In our quest to reach a recalcitrant audience, we
ask the wrong question first, all but guaranteeing the
cascading domino effect of wrong answers. For example, it
makes no sense to ask?or even worse, assume?what kind of
ads consumers prefer, because they can't possibly have a
preference for something they don't want in the first
place. It's like asking someone who's facing execution if
they would prefer to have their head chopped off or be
burned at the stake. As they say, ask a stupid question,
get a stupid answer (despite Curly Howard's assertion that
a hot steak is better than a cold chop).
When online display ad CTRs began their precipitous decline
from 5% just a few years ago to less than .1% today (a 98%
reduction), the writing should have been on the wall. How
did the digerati spin this? They ditched the click-through
as a meaningful metric?despite the fact that it's the only
online metric that measures actual response?and reverted
to the same soft metrics they had previously accused the
broadcast folks of hiding behind. So much for account-
ability! Worse yet, these legions of 20-somethings (many
of whom weren't yet born when an advertiser could reach
70% of the marketplace through just three television
channels on any given night) misinterpreted reach as a
supply-side metric. Anyone with an ounce of media
experience knows that reach is an audience measurement
and has nothing to do with the supply. Reach can only be
achieved in a linear application. It literally means to
reach someone?not something.
And as if things weren't bad enough, we now have behavioral
targeting proponents straying even farther from the path.
Relevance, resonance, recency?all ways to justify perhaps
the most idiotic marketing meme ever conceived. BT, like
all targeting methodologies, works against scale. It uses
customer data gleaned in the rear view mirror to navigate
the road ahead. For all practical intents and purposes,
it's like driving blind. In so doing, BT invades privacy,
doesn't talk to prospects, and falls victim to the same
logic that dictates why you can't reach anyone with a
product that no one wants, relevant or otherwise. What's
more, BT attempts to legislate taste; an impossible task
that only further reduces the prospects for success. Ask
Charlie Tuna and he'll tell you that Starkist doesn't
want tunas with good taste, they want tunas that taste
good. And what does it say about how far we've come when
an animated fish knows more about marketing than we do?
The truth is, we do know we're in trouble. We're painfully
aware of it even if we won't admit it. How else do you
explain online "impressions" priced at less than a buck
per thousand? We have a demonstrably worthless oversupply
of inventory for which there is self-serving internal
demand at best, and absolutely no external demand. Stated
another way, we now have more places for advertisers to
waste their money than there are consumers to waste it on,
yet we persist unabated in this folly to the tune of
billions of dollars per year with virtually nothing to
show for it.
Meanwhile, radio and television, both mere shadows of
their former selves, are enjoying a dead-cat bounce at
online media's expense as desperate advertisers seek
refuge within the reach devil they know. But let me
reiterate: It's called "on-demand" for a reason, and no
matter which medium you choose, you can't scale what you
don't reach, and you can't reach anyone with ads they
don't want and are inclined and equipped to avoid.
The media model that will ultimately realize the promise
of the digital revolution will be one that recognizes the
foolish futility in scaling the supply. This model will
draw upon the lessons learned in the halcyon days of radio
and television, when sponsored content was king and
advertisers knew the audience was there for the show and
not the ads.
Next up in this space: Scaling the demand.
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