In 1998 if I was to tell you that over the next decade broadcast television would sustain double digit audience declines, eroding away nearly half of the total audience delivered at its peak, and yet television advertising would increase in value would you believe it? In the same year if I was to tell you that over the next 10 years, newspapers would take their brands onto the Internet, nearly quadrupling their reach and doubling the number of ads they carry and at the same time lose massive amounts of revenue and over half of their overall value, would you have believed me? Doubtful. These things did happen however. Don't feel bad. I didn't predict them either. Nor did anyone else.
The Internet and digital technology have ushered in unprecedented change in media. On that we can all agree. Exactly why however isn't as clear. I mean wait a second, in what sort of a twisted media world does it make sense that a brand more than doubles its audience and makes significantly less money and at the same time a brand loses half of it's audience and makes more money?
The Internet has exposed the flaw of reach as a media metric and the entire media industry is still wrestling with the fallout. For over 100 years, reach has served as the core currency for the buying and selling of media. How many people do you reach and what is your cost per thousand? Yes demographics plays a role. Premium brands with premium audiences are able to charge premium prices. This is mostly the domain of B2B and niche media however. In the consumer media world the basic calculus is still based on reach.
The idea that basic reach was not the most effective way to value media was being challenged long before the commercialization of the Internet. One to One Marketing was popularized in the 80's. Smart marketers have long been trying to drive deeper levels of engagement that would fuse demographic targeting with contextual messaging in order to drive response and engagement. For the most part however this was more academic discussion than a shift in media buying practices. Ad agencies simply haven't been structured to make money on targeted media, that revolves around engagement, in nearly the way they have been for television and broad reach print.
Web 2.0 touched off the engagement era of media in earnest however, by delivering a whole new series of tools, applications and platforms that enable contextual relevancy and engagement. The media industry is still lagging behind though. Take as an example the platform of Facebook. Everyone talks breathlessly-myself included-about the 150 million registered and 120 million active users. The reality is however Facebook is made up of a large number of micro niche networks. A huge network on Facebook is in the low thousands. As a result it's difficult if not impossible to sell reach as a driving metric and Facebok suffers as a result.
How about Google you say? Well yes Google has built and scaled the most powerful media app since the introduction of television. The reality here as well is that Google is driven more by basic reach, even though it's priced as Cost Per Click, which feels like something different than simple reach. The sheer mass of users of Google assures that any highly differentiated, complex and expensive product or service will generate a ton of response and also a ton of waste however. From a marketing and media perspective this is the equivalent of standing on street corners and shouting your message at cars driving in the area and charging per horn honk. Why do you think Eric Schmidt is talking about the power of brands on the Internet? His "without brands the internet will become a cesspool of worthless information" talk has not gotten the reaction it should. He's not saying this to be controversial. He's saying it because he doesn't want to see Google lose it's core brand value and become a broad mass medium.
Ok smart guy so where do we go from here? My sense is that the Internet will continue to evolve media enabling more contextual content, which increases relevancy and engagement. We are also learning that the Internet is not a solo act as the increased metrics of integrated programs with Internet, Print, Live events and other media demonstrate. As an industry though, we still lag behind in being able to provide relevant metrics, beyond simple CPC or impressions-which are really Web 1.0 versions of reach metrics-that enable agencies and marketers to redefine reach and drive relevancy and engagement. Anyone heard anything even remotely innovative from the research and tracking services in this area lately? Hello Nielsen, are you there? The good news is you have more people, using more media than at any time in history. We need to redefine reach however to assure that we can develop the appropriate metrics that are more reflective of the media platforms and audience trends that are a part of todays media world.
In closing let me wish everyone a very happy, healthy and prosperous 2009. While this will in all likelyhood be a challenging year due to the economy, there continue to be new areas of innovation and creativity in media, that will make life interesting and represent tremendous opportunity.
Update on Saturday, March 21, 2009 by Tony Uphoff:
<p>Some good discussion on the changing nature of reach in media. To the question on television increasing in value, this is a simple metric, albeit surprising. The value of time for true mass reach on television continues to go up. The most recent Super Bowl air time ran off for $100,000 per second. The highest CPM yet. This is not to say all television air time has increased in value. But the CPM's for the largest reach shows with solid demo's are at all time highs. </p>
Also heard from several people who wanted to discuss the lack of relative value in online reach and inventory. This is indeed one of the conundrums of our time. There are a ton of theories but most revolve around the lack of a common currency like a Nielsen rating that would serve as an acceptable buy/sell foundation. Many people feel it's only matter of time before QuantCast or another company solves this issue. Frankly I'm not so sure. I think the analytic driven nature of the web itself will make a standard sample, projection based model to become accepted. Ironically media that has no ability for truly transparent analytics commands higher-far higher-CPM's than online media which does. In a conversation with the CEO of one of the major online measurement services he said until advertising agencies can buy online efficiently, the same way they buy print or television, online media will continue to struggle to sell the reach they have.,