It's Called "On-Demand" for a Reason! - Mike Einstein - MediaBizBloggers

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 accountability! 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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