Much of Traditional Media is based on estimated audience data, but as we move more towards a digital-centric planning environment, our focus will shift towards accountability and the dominant forms of media will cease their dependence on estimates and shift towards actual audience. The real question is when, how long will this take and what are the implications for planners and buyers?
The accountability of digital media is a blessing as well as a curse. Since day one, our industry has touted the wealth of data regarding actual interaction and response with our advertising messages. So much has been made of this that it took a significant amount of time for our industry to become a viable format for brand advertisers, but finally they’ve come around to understand it. I recently attended and was involved in Jumpstart’s Think Digital conference in Napa and I listened to a gentleman state how when he interacts with auto dealers and dealer associations throughout the country he was able to convince them that this medium should be evaluated like every other form of media; based on awareness as well as results. His statement was that when an advertiser asked to see the creative that was running, they were implying that the message itself had value, which lends itself to an awareness metric rather than a direct response metric because they understood that the message, even when not replied to, had merit.
As you know, digital media is based on actual data of an audience interacting with the media vehicles they choose. Nielsen’s business in the traditional world, which has been highly profitable for so long, is based on a sample size audience providing estimates for Television. Nielsen has also built a business, along with Comscore and some other folks, on measuring the actual audience rather than estimates for digital media, specifically online and Internet sites. As the Television business begins to shift more towards digital media and a digital-centric model (via Digital Cable, VOD, Online VOD and other IP-based formats), that estimate of audience will no longer be appropriate and the actual data will become more the basis for planning and valuation of all Video, Television and Internet TV media vehicles.
Digital Outdoor is quickly replacing Traditional Outdoor and along with the ability to replace creative faster and more cost effectively, many of these formats are becoming more accountable as well, installing GPS tracking systems that can read the GPS tags of automobiles and/or cellphones that walk by or are in proximity of these boards, thereby more closely measuring actual audience interaction rather than estimating audience. This is the shift we are witnessing in this form of media, towards accountability.
The implications of this are rather easy to see. First of all, the business gets easier as buying can become more automated, thereby continuing to commoditize it. The planning and the strategy behind the business will become more important, but only because a larger portion of the dollars will shift towards a less standardized model. If you pay attention to what is happening now, approximately 40% of all spend Online goes against Search. I foresee that the Search portion will be automated, and approximately 50% of the remaining 60% of budgets, allocated towards Display, will also be automated. This reflects the portion of your budget that will go towards banners and standard IAB rotations through Run of Network and Run of Site opportunities. That means up to 70% of your basic ad buying will become a commodity. That’s a pretty high percentage!
That leaves 30% of your paid media budget going towards highly strategic placements, which is great for people like me who build business based on strategy, but what’s even better is that beyond the 100% of your paid media budget, there resides an additional 10-20% of “budgets” that will go towards non-paid media, whether it be buzz generation, brand management or some other element of Digital Media (it makes me think of that old Yogi Berra quote… “90% of Baseball is mental and the other half is physical”). Today those elements may include the development of a website, or a mobile site, or a game or your social networking presence, but all in all these represent a portion of your effort that go above and beyond your established paid media. These are effective, they are increasing in importance and they are typically overlooked by your basic media agency. Clients typically have to seek other partners to execute on these pieces because they don’t feel their core agencies have the expertise to be effective here. That can be scary when you realize that up to 70% of the base budget that your media agency handles can be automated and managed for much less of a budget.
The reason I bring all of this up now is this model of going beyond your paid media budget, while starting to be understood in the Online Media world, will almost certainly get applied to the digital extensions for Traditional Media. This model will certainly take hold in Mobile, and in Internet TV and in other formats such as Digital Outdoor, and beyond. I cannot profess to say how, and my best guess as to when would be sometime in the next 10 years. It takes time to rebuild an industry of this size and scope, so some people might say it will take longer, but I think 10 years is about right. By the year 2017 we’ll be writing about performance based pricing and buzz generation in Outdoor and Mobile and a hundred new agencies will have popped up to service these categories.
The estimates for ad spending continue to rise, but I wonder when and how they will be able to incorporate these “beyond paid media” budgets into the mix? Will they ever understand that beyond paid media lies non-paid media, but it is all media nonetheless?