Monday, September 11, 2006

Disaggregation: A Digital Strategy

Have you’ve noticed how trying to aggregate consumers today is a
little like trying to keep kittens in a box? Sure, you might get a few
in, but they’ll inevitably jump out when you go to get the others.

Kittens are, after all, curious. And when it comes to staying put,
they’re the ones in control.

Same holds true for today’s consumers. Yet, we in the advertising
business keep trying to aggregate them so that we can justify…
well…what exactly? While differences of opinion exist, it could be
argued that we keep trying to aggregate so that we can continue
to justify the princely sums that we charge our clients.

Mass media has been very good to the ad industry. For many, it’s
meant mass millions. Complaints were few when an impression
was the most that could be measured. After all, whether an
impression had any effect really didn’t matter. We were still able
to charge for it.

Things are different in the digital world. Along with impressions,
involvement can now be measured. Which could well start to
eliminate aggregation as a strategy.

Let’s take a look at how the current compensation models are
constructed, both for media and production. Media is somewhat
more straightforward - the more impressions delivered, the more
money made. Granted, the percentage that agencies take home
is lower than in the past, but a correlation still exists.

As for production, well, the only way that agencies can justify
today’s exorbitant costs for a :30 spot – somewhere in the
neighborhood of $375,000 - is that the spot is going to be
seen by millions of people at least three times each.

Can agencies, in good conscious, still charge $375,000 when
they know only 200,000 actually watched the spot? Oh, sure,
they’ll try, but will marketers pay? Would you, if you were a
marketer?

The digital world, with its granular measurement capabilities,
is less about how many had the chance to see the spot and
more about how many actually started watching and how
long they watched for. By measuring and monetizing
involvement, marketers can pay for how long a viewer
watches a commercial rather than how long the agency
worked on it.

Let’s say that you’re a marketer and you know – not assume,
but actually know – the data, after all, will be right there in
front of you – that most viewers watched only the first 10%
of your spot. Knowing this, will you, or will you not, be hard
pressed to pay your agency full fare for the other 90%?

It’s a question that marketers will soon need to answer because
this digital data already exists. How come you haven’t seen it?
Simply because it’s being closely guarded behind locked doors
at every cable company, broadband provider and satellite distributor.
TiVo also has this data, and, for the first time, they are starting to
share it. It should prove interesting. In his recent book, "What
Sticks," co-author Greg Stuart states that Mr. Wanamaker was
wrong about 50% of advertising not working. According to
Mr. Stuart, the correct figure is 37.3%. What if, when the data
finally does come out, Mr. Stuart is also mistaken and the number
is actually closer to 90%?

Yes, what then?

Well, for one thing, the stuff that does work well, the type of creative
that does involve the viewer, will be very, very valuable. As will the
agencies that know how to create it.

Obviously, agencies will need a way to monetize the information so
that they can turn this digital data into dollars. But these monetization
models are near. And once introduced, the locked doors will magically
open. Agencies will be able to make a better income talking to the few
that are interested, rather than the many that aren’t.

Until then, we will keep aggregating to make our old compensation
models work. But while doing so, let’s fess up. It’s compensation -
not aggregation - that we are truly worried about. And while the
future may be hard to predict, this much we do know. Consumers,
like kittens, will be spending more time outside the box than in.

Which obviously, is where our thinking should be as well.

2 comments:

  1. Anonymous12:53 AM

    Hi, i think that i saw you visited my blog thus i came to “return the favor”.
    I am trying to find things to improve my website!I suppose its ok to use
    some of your ideas!!
    Also visit my website John Thomas financial

    ReplyDelete
  2. Anonymous12:57 AM

    You actually make it seem so easy with your presentation but I find this topic to be actually something that I think I would
    never understand. It seems too complex and very broad for
    me. I am looking forward for your next post, I'll try to get the hang of it!
    Also visit my website ... john Thomas Financial

    ReplyDelete